With so much time at home recently, many Australians are rethinking their living space. Maybe it’s time to find a bigger place, or a larger backyard? Maybe it’s time to relocate somewhere more convenient? Or maybe, if working from home has become a viable longer-term option, that long-thought-about sea or tree change is finally on the cards.
Before you start searching for properties, it pays to do some research. You might find buying the second time around quite different to the first. For starters, there are two homes involved and usually both a buying and selling process to negotiate. And if you buy before you sell your current home, the finance can be more complicated.
To help you plan your strategy and explore your options, here’s a step-by-step guide to get you on the road to your next home.
1. Figure out what you’re looking for
Buying your next home is a major life decision. So the first things you need to ask yourself are why you want to move and what you’re looking for in a new home.
Take a moment to list your main priorities. You might want more space, to be closer to the beach or to have a quicker work commute. This will help you start doing your real estate research – to see, for example, how much the property you’re looking for is likely to cost in the area you want to move to.
Once you’ve figured out what you’re after, you might come to the conclusion that you’re basically happy where you are and would be better off renovating your home to make the changes you need. Or it may help make it even clearer that it’s time to move.
2. How much equity do you have?
If your current home has increased in value over the years or you’ve made extra mortgage repayments, you may hold significant equity in your current home.
You may be able to use this equity in the process of buying your next home – for example, as security for your next loan, or to help with your deposit.
To get an idea of the equity you hold, you’ll need to get an estimated market value of your current home. One of our free ING property reports can help you do that, as can a market price estimate from a real estate agent. Your equity will be the difference between your home’s market value and the amount you still owe on your home loan.
In most cases, you won’t be able to borrow that entire amount. So to find out how much equity you might be able to use towards your next home, you will need to talk to your lender. If you have your home loan with ING, our home loan specialists can help. Simply call them on 1800 100 258.
3. How much can you really afford?
Now that you have a rough idea of what the home you’re looking for will cost, and the equity you have available, you need to get an understanding of how much you can afford to borrow and repay.
Our borrowing power calculator can help you figure out how much you could borrow, while our repayment calculator can give you an idea of what to budget for each month based on the amount you want to borrow. But again, chatting with your lender, or one of ING’s home loan specialists, can help you to begin to assess your situation in full.
4. Are you selling or buying first?
Now that you know your budget, next comes the age-old upgraders’ question: is it better to sell or buy first?
Selling your current home first is generally considered the safer option, while buying first may give you more opportunity to find your ideal next home. But there are pros and cons to both. And the current state of the housing market is also a big consideration – especially right now. Keen to explore both sides of the buy-or-sell coin? We’ve got an article for you here.
5. Get your finances sorted
All right, you’re getting serious now. Even if you’re in the ‘sell first’ camp, you need to start thinking about getting your finances in place to buy – as you may want the gap between the two settlement dates to be as close as possible.
Getting a home loan pre-approval from a lender is a great way to get the confidence to start your property search. Pre-approval is an indication of your ability to borrow funds from a lender (based on the information you’ve provided them). It will help you show real estate agents and buyers that you’re in the game and are more likely to afford the property. It lets you bid at auction and gives you an idea of what price range to keep your property search within.
If you’re buying first, it’s a bit different. You will need to think about how you’re going to pay your deposit and potentially organise bridging finance with a lender so you can juggle two loans at once.
6. Start searching for the new (or preparing for sale)
You’ve got your pre-approval sorted – now the search begins. You’ve got a good idea of what your budget is and what you’re looking for, which helps narrow the field. Now it’s just a matter of finding the home that’s right for you.
You may have to attend quite a few open homes, and it can be hard to remember which home is which. So a good tip is to keep a little checklist of the things you like and dislike about each home, and take lots of photos to help trigger your memory.
At the same time, you may be getting your current home ready to sell, depending on your strategy. If that’s you, then take a look at this article for some great tips on helping prospective buyers fall in love with your home, just like you did.
If you’re selling and buying at the same time, it can be quite stressful. So it’s important to do as much as you can to get your finances sorted and do your research upfront so you’re ready to go when you find your dream home.
7. Make an offer and finalise your finances
You’ve found a home you like. It ticks all your boxes, or most of them, and it’s in your price range. If you’re confident that this is the home you want and can afford, and all the inspections check out, it’s time to make an offer. Once you’ve agreed on a price with the seller, link in your lender to ensure all the finance is assessed and approved so that you can get ready for settlement.
If you have yet to sell or rent out your home, it’s time to get that in full swing to minimise financial losses and get ready to move into your new home!
Get a helping hand from a specialist
Our ING home loan specialists are here to help. No matter where you are in the process, whether you’re trying to calculate your equity or obtain pre-approval, they can chat you through all your options and give you a clearer picture of your next steps.
To talk to an ING home loan specialist
simply call 1800 100 258, 8am – 8pm, Monday to Friday or 9am – 5pm on Saturday.