There are several considerations to make when deciding to upsize or ‘trade up’, yes it’s an attractive prospect but a significant undertaking.
The urgency of relocating will likely be higher if you are starting a family, and your current home is not big enough. However, if urgency doesn’t play into it as much, you’ll have time to hunt around for a great deal. A larger home will also inevitably attract higher ongoing maintenance costs, which you should factor into your decision.
Obviously, seeking informed financial advice is important, as is reviewing your current debt situation, as this may affect your ability to borrow. Most New Zealand banks and financial institutions provide online home loan calculator tools. But seek advice from a mortgage broker as often these online tools are misleading to what you can actually borrow.
There are options such as bridging finance, which is a short-term loan offered by some lenders; it enables the unconditional purchase of another home while still selling the first home. While popular in a heated property market, as it gives the buyer a better chance of negotiating with an unconditional offer, it does bring greater cost and risk—as you have two loans at once.
If you’re looking to upsize, keep an eye on the local property market and consult a trusted local mortgage broker so they can crunch the numbers quickly for you. Banks have a varying appetite for bridging finance and you need to know your limitations early on.
We have been getting a lot of calls from people lately wanting to upsize, even if it is only for a small gain.
Suburbs like Raumati are incredibly hard to upsize in because there are no new builds. It’s much tougher here than it is down the line say in Aotea and Whitby where you can buy a new home for under $900,000. New subdivisions are opening up in Waikanae, so we are encouraging people to consider looking further afield. Also, people should consider extending if more space is the main reason for moving.
If you’re only making a small gain then factor increased lending costs, real estate agent fees, and moving fees into the mix, as you may not make as much of a gain as you think.
As with any major financial decision, it’s best to seek advice from a trusted mortgage or financial adviser first, and to know your rights, and your options.