How do you know when it’s time to pack up your life and trade your old home for new? Well, for most of us knowing when to upgrade your family home usually becomes pretty obvious. You might have a baby on the way or have you simply run out of space to fit life into where you’re living. So what happens next once you’ve made the decision to upgrade?
Should you renovate or relocate?
There are of course a number of things that are going to impact your decision to stay and renovate or find your next home somewhere else. We cover off a few in our Renovate or Relocate article.
When the Hall family decided to relocate, there were a few factors that impacted their decision but ultimately they decided to build their beautiful Hamptons style beach house for their family to enjoy for years to come.
How much is it going to cost you?
One of the major factors in any decisions you make is going to be the cost attached. This includes the cost to sell the property including marketing and real estate fees, or whether you’re going to keep the property as an investment – you need to consider all of the expenses that are attached to keeping or selling the existing property.
The next expense is going to be the cost of buying – can you afford to buy where you want to buy, are you going to require another home loan and if so, how much can you afford to borrow?
A lot of lenders have changed how they asses your income and expenses, meaning what you can borrow may be different to when you first purchased. Before you dive in and start bidding, we’d recommend speaking with one of the team. We’ll do a thorough financial assessment and have an in-depth discussion about your lending situation and financial structure first.
Is it best to buy or sell first?
If you decide to sell first you’re in good company, a lot of our clients choose to sell first then utilise the equity from the sale to fund the next purchase. In an ideal scenario you’d be able to settle both sale and purchase of the new property on the same day so you don’t end up with an overlap requiring you to pay two mortgages at once.
You also probably don’t want to be homeless for any period of time, so if the settlement of the new property is going to take a little longer, many people negotiate to lease their existing property from the new owner until moving day.
If you decide to buy first, the biggest hurdle is the financial burden of potentially paying two mortgages at the same time. Some houses take a little longer than others to sell, especially depending on the market in the area you’re in, and you probably don’t want to be in a rush to sell – you want to maximise the return on the property.
If you aren’t able to time the sale of your older property with the purchase of the new and are unable to access the equity, you may find you need bridging finance to purchase your new property. Bridging finance can be expensive compared with a standard home loan however we can give you a hand with this should you find yourself in this scenario.
Should you having trouble selling the original property, it might make sense to rent for a period of time until the market is more favourable for a sale.
Is your family home an investment?
We cover more on the topic of treating your family home as an investment on the blog here. In our minds, no matter whether you’re planning to settle in the home for a decade or it’s another stop over on the way to your forever home, we think you should always treat the property as an investment.
This means getting sound advice on where and when you buy, the features you should be looking for and how you go about structuring your loan.
It’s easy to feel confused when you’re in the midst of buying, selling or investing. Get in touch with Entourage and we’ll help you find your way through.