Buying your next home is a major decision that takes planning, research and careful budgeting.
Having previously owned a house you will be familiar with the process, the parties involved and have clear objectives. This might make it easier to find a new home and select a new loan. Or it might have opened your eyes to the fact that mortgage brokers can provide a value-added service that takes some of the hassle out of the process.
When people are buying their next home, they are generally doing so in one of four scenarios:
They have already sold their property and banked the cash
There is a contract in place to sell the current home before or on the same day as buying the new one
The existing house is on the market but hasn’t sold. At the same time, they have entered into a contract to buy the next property.
Buying the next property with a view to keeping the existing one as well as an investment or a holiday home.
Which one of these you choose comes down to your financial borrowing capacity, available cash and the market for buying and selling.
Scenarios 1 & 2 above are considered safe by most lenders given the degree of certainty for available funds. Scenario 4 is also considered quite safe given it suggests a relatively strong borrowing capacity. In these three scenarios, there is a structure in place to ensure funds are where they need to be on settlement day.
Scenario 3 is what we call Bridging Finance and presents a nicely packaged solution when some extra time is needed. We have a page on this website which takes you through this particular scenario in more detail. Essentially it prepares you for buying a property once you find it. This means you hold both debts at once for a short time, hence the term bridging. It sets a timetable for selling the existing one to reduce the debt to a more manageable level.
The same core principles as for first home buyers essentially still applies here:
A pre-approval cuts down the chances of being declined once you find a property and often speeds up the final unconditional approval process.
Set your property objectives in terms of must-haves, nice to haves and non-essential items. This will help you keep focused when searching online and visiting open houses.
Work out your budget in terms of what you can afford to pay for a property and how much you can afford to repay off a home loan each week/fortnight/month.
Do your research. Maybe you lived in the same area before and are upgrading. Maybe you are moving to a new suburb. It is important to research the market. We can help you here with market reports that look at local, recent and comparable sales.
A key difference, however, if the experience factor. Now that you have been a home owner you have learned from mistakes and established what worked for you in the past. You might love or hate your first lender. You might have had a friend tell you about a great feature that you never had before, such as offset accounts or fixed rates.
As mortgage planners and brokers we have a tried and tested process to work this out with you so that you can select from loans that best meet your objectives. After going through this we might establish for instance that for you having branch access is less important that a great ATM network, or that a functional online and app presence simplifies life. Perhaps you don’t want to pay an annual package fee for all those features you have never used, and at the same time get a better interest rate. This is all driven by what you want to achieve.