Managing finances to make it happen sooner
Upgrading and buying your next home might be easier than you thought. There are a number of ways to give yourself the flexibility to buy the right house, in the right area for your family, even before you sell your current home. This guide explains the different options for upgrading your family home – including bridging loans – so you can move quickly when you find the right property.
- Buying first vs selling first
- Keep your old home as an investment property
- Extended settlement
- Bridging loans
- Loan portability
- Deposit bonds
Buying first vs selling first
One of the positives is you’ll know how much money you have to spend on your new home, and you won’t have to pay off two home loans. However, if you’ve already sold and don’t find a suitable house to buy before settlement, you may be faced with even more costs:
- paying rent – you’ll need to live somewhere!
- additional removalist fees
- additional utility connection costs
- storage costs
Not to mention the headache of moving house twice! Asking the buyer for an extended settlement can help, though they may prefer the standard settlement period of 4-6 weeks.
If you buy before you sell, you may have to make repayments for two home loans until you do sell. There’s no knowing when you’ll sell your house, so how long you’ll make double loan repayments is uncertain. You can try to negotiate with the vendor for an extended settlement.
If this doesn’t suit, a trusted lender will help you bridge the gap with:
- Bridging loans
- Deposit bonds
- Loan portability
Mortgageport has helped hundreds of Australians upgrade their family home, and we’d love to assist you too. Talk to us today for an obligation-free chat on 1800 100 747.
Keep your old home as an investment property
Investment property is a great way to grow assets and build wealth, using the equity you already have built in your current home. The rental income helps pay off your investment home loan. By keeping your home you’ll avoid paying stamp duty and avoid the time and costs of advertising and selling.
However, you also need to consider the following before deciding to keep your old home as an investment property:
- Is the area popular for renters?
- Will your rental return be relatively high?
- The tax benefits of investment properties may not apply if you are increasing a home loan to buy a new property
- Tax deductibility may be reduced by loan redraws you’ve made in the past, such as cars, boats and holidays
Talk to your lender or financial adviser for more information, who can help you decide if turning your old home into an investment property is the best option for your personal circumstances.
When you buy or sell a home, contracts are signed and exchanged, and a deposit is paid to the vendor. This is followed by a period of 4-6 weeks during which time enquiries are made and documents prepared solicitors or conveyancers. Settlement is when the full amount of the sale price is paid to the vendor, and you become the legal owner of the property.
Although the standard settlement is 4-6 weeks you may be able to negotiate a longer period – known as a delayed settlement or extended settlement. This gives you, and the buyer/vendor party, more time to manage the gap between buying and selling.
A bridging loan provides the funds you need to buy your next home before you’ve sold your current home. It enables you to pay the deposit to secure your new property and covers other buying costs such as Stamp Duty. Once you settle on your old home, the proceeds of sale are paid as a lump sum to reduce your interest repayments on the bridging loan. The bridging loan then becomes your new home loan.
Mortgageport offers very competitive rates on Bridging Loans tailored to your specific needs. We keep your bridging loan costs low, with no establishment fees or ongoing account keeping fees.
Got questions about Bridging Loans? Mortgageport is here to help. Call us today on 1800 100 747.
Loan portability means transferring the loan on your current home across to your new property. Some home loans offer this as a feature, so you won’t need to refinance when you upgrade to your next home. Bringing your old loan with you works if you’re selling and buying at the same time. While you have the convenience of staying with your current loan, and you don’t need to pay for bridging or refinancing, there are normally fees attached to using this feature. If you’re sure the loan you already have is the best deal for you, then loan portability may be worth exploring.
Upgrading can be an opportunity to refinance your home loan. This means taking out a new loan to pay off your current mortgage, to get improved loan features and/or a more competitive interest rate. If you’re thinking of refinancing, remember it’s important to get good financial advice to be clear on all the costs and fees, and, of course, to make sure you are getting a better deal.
Mortgageport is a non-bank mortgage manager, and we take the time to understand your personal situation and tailor the best refinancing home loan to your situation. We’ll find you the best rates and coordinate the switch to a better loan to support your family home upgrade.Upgrade your home today with a Refinancing Home Loan from Mortgageport. Call 1800 100 747 to talk to a friendly Loans Consultant.
A deposit bond can be used to pay part or all of the deposit to secure your new property. The deposit on a home purchase is normally paid when contracts are exchanged, or at auction where you’re the successful bidder. Benefits of using deposit bonds include:
- Ready access to cash for a deposit so you can secure the right property when you find it, even if you haven’t sold your current home yet
- Relatively inexpensive – depending on the lender of course
- You might avoid the need for bridging finance
Deposit bonds avoid the need to use your own immediate funds, but you’ll still need to pay the full deposit and purchase price at settlement.