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Buying My Next Home

We’re here to take the hassle out of upgrading or downsizing.

Buying My Next Home

So, this isn’t your first rodeo. While you’ve purchased a home before, having ‘’been there done that” doesn’t make buying and moving into your next house any simpler. You may still be confronted with a heap of complicated processes and fresh issues.

Life is full of changes and, sometimes, these shifts can turn your once wonderful home into a source of stress. Maybe your two-bed is getting too cosy for the whole family, maybe this heatwave has cemented your decision to move closer to the ocean, or maybe your once pleasant neighbour has slowly morphed into the devil himself.

Whatever the reason, we take the pain out of home loan management so that you can move house without compromising your financial security – If you plan on selling your home and using the money to buy a new property without a loan, you’ll struggle to organise finances that cover the gap between your sale and purchase.

We’ve put together some smart, simple solutions for second home buyers, so that you can upgrade or downsize your property in the best way possible.

We’re your knights in shining armour – or well-pressed suits.


Before you do anything else, you need to decide whether you’ll buy your new home or sell your current home first. This can seem like a catch-22, as you may not want to risk selling until you’ve bought somewhere new, yet you can’t afford to buy until you’ve sold.

Below, we’ve included some of the most common methods for moving house.

  • Selling first: This is appropriate if you have little to no equity or it’s likely that your property will take a while to sell.
  • Buying first: This is a smart choice if you have substantial equity and a high enough income to manage the finances for both properties.
  • Buying first with a guarantor loan: This is fitting if you have little to no equity, a high enough income to hold both properties and your parents have agreed to put up their property as extra security for your home loan.
  • Simultaneous settlement: This is appropriate if the purchase and sale are settled on the same day. To arrange this, you’ll need strong negotiation skills or the help of an excellent mortgage advisor and solicitor.
  • Bridging loan: This is a viable option if you have significant equity but not enough income to keep both properties for a sustained period of time.

Your chosen method depends on your existing equity situation, the type of loan you are eligible for and what your distinct needs are.

We recommend asking yourself the following questions:

  • Will my home sell quickly?
  • How long will I be searching for a new home?
  • Can I receive any financial help from my family?
  • Do I have enough equity for a bridging loan?
  • Do I have a strong enough income to hold both properties simultaneously without a bridging loan?

When selling your property to buy a new one, settlement dates don’t always line up. If you’ve come across the right home to purchase but haven’t sold your current property yet, you may want to consider bridging finance.

With a bridging loan, the lender tends to finance the purchase of your new house, as well as taking over the mortgage on your current home.

The total sum of borrowed finance is called your ‘Peak Debt’. This is calculated by adding your new property’s value and any purchase costs to the outstanding mortgage balance of your current home.

Your ‘End Debt’ is the balance of your new loan, and is calculated by subtracting the estimated sale price of your existing property (minus the selling costs) from your ‘Peak Debt’.

Depending on your personal and financial circumstances, a bridging loan may or may not be for you.

Consult our points below so that you can weigh up the advantages and disadvantages:


  • In some circumstances, you may not be required to make any loan repayments during the bridging period
  • In some cases, you might only have to make interest payments. We always recommend that you pay as much as possible so as to minimise any accrued interest.


  • You need to accurately predict the sale value of your existing property. If it doesn’t sell for as much as you originally intended, you might not have adequate funds to pay off your bridging loan and buy your new home.
  • The longer your sale takes, the more interest you will have to pay.
  • If your home fails to sell within the bridging period, which tends to last 6-12 months, you could be obliged to make repayments on the total amount of both properties. Not only may you not be able to afford this, but the lender could force you to sell your property at a lower price. Therefore, only consider bridging finance if you are confident that your existing home will sell within the bridging period.
  • Some lenders charge a greater interest rate on bridging loans than other types of home loans.

Home equity is the market value of your property minus any debt held against it.

Generally, a bank will lend you up to 80% of your current property’s equity, placing you in a great position to invest, downgrade, upgrade or purchase a holiday home.

Depending on your financial situation and the amount of equity available, you may be able to completely finance the purchase of your next property.

Let’s say your home has a market value of $400,000, and you have an outstanding mortgage balance of $100,000.

As most banks will lend you a maximum of 80% of your property’s value, here’s how to calculate your home’s usable equity:

  • Your property’s market value = $400,000 x 0.80% = $320,000
  • Your pending mortgage repayments = $100,000
  • Your property’s potential useable equity = $320,000 – $100,000 = $220,000

This means you have $220,000 of useable equity to purchase your next home.

While this equity can make all the difference, beware: The bank still requires evidence that you can afford repayments on the full loan amount, which includes both the previous and new mortgages.

  1. Refinance your mortgage: First things first, your home will need to be revalued. A lender can then refinance your home loan according to its new value, allowing you to withdraw cash based on the equity. Bear in mind that the more you borrow, the greater your repayments and interest charges will be.
  2. Use a line of credit: A line of credit is a separate home loan that extends your credit limit based on your property’s equity. You can use as much of your extended credit amount as desired, and only pay interest on the amount you have spent.
  3. Apply for a bridging loan: If you are putting your existing home on the market, a bridging loan can help you by covering any gap between selling your property and purchasing a new one.

When you borrow finance to buy a property, it’s critical that you consider your budget and cash flow, including a buffer for any unforeseen expenses or interest rate increments.

It’s pretty straightforward once you’ve covered these bases. Your property’s value may increase gradually, generating equity over the long-term.

Various factors influence the cost of accessing your equity.

If you wish to access over 80% of your useable equity, you must pay for lenders mortgage insurance (LMI). LMI protects the lender in the case that you cannot make mortgage repayments, and the property’s value does not cover the outstanding loan amount. The cost of LMI depends on the lender, the risk level and the charged interest rate. This one-off charge can be added to your loan or else paid upfront.

Switching lenders to access home equity can bring additional costs, including application fees. An “establishment” fee is an upfront payment at the beginning of your loan process to cover document preparation, legal fees for loan set-up and a standard valuation. You may also incur exit costs associated with closing your existing loan product. Not all lenders charge these fees, so our team will keep you informed on which lenders to go for.