New home, refinancing or renovating - We’ve got loans to suit you - Part Three

12 September, 2019
Moving house is stressful enough with the packing and organising - you shouldn’t have to stress about your home loan. 

Your next home - whether it’s upsizing or downsizing - is a huge milestone.

If you’re upsizing, you’re getting the bigger space you’ve been waiting for. A very exciting time! 

If you’re downsizing - and you’re in your mid 50’s or older - you may need to provide the lender with an exit strategy, to show how you plan to pay off the loan
 

Upsizing

Lots of people find themselves looking for a bigger home as their circumstances change - whether that be with with family, lifestyle, work or finances.

If you’re buying a bigger home, there’s a good chance you’ll need to borrow more money - and will therefore be looking to refinance.  We covered refinancing in part two of this series

Some other things to think about are:
  • Your current property - will you hold onto it as an investment, or sell? Will you need the proceeds to go towards your new loan? It will depend on what you can afford, and how much equity you have built up.
  • Taxes, fees and the costs of moving - not to mention filling the new space! if you’re going from a two bedroom to a four bedroom with multiple living areas, you’ll need some more furniture!
  • Timing - is now the right time to buy, or sell? How do the benefits of buying in this current market weigh up against the consequences of selling?
 

Downsizing

Now, this is a little more complicated. 

Our first tip for downsizing is - to think ahead, if possible!

If you believe you may be looking for a smaller space in the near future, factor this in when you negotiate (or renegotiate) the terms of your home loan. If you’ve been on a fixed rate, and it comes time to fix them for another three years, have a think - will you potentially sell in the coming years?

If so, it might be time to switch to a variable rate, to avoid break fees when the time comes, and to give yourself the option of paying off the remainder of the loan in one chunk.

Of course, make sure you do your research - but it’s definitely something to consider.
 

Bridging Loans

If you’ve managed to build up sufficient equity in your home, selling alone may fund the purchase of your new property - and you won’t have to worry about finance.

However, if will need to borrow, you may need a strategy in place. Some banks are hesitant to lend to older borrowers, particularly those over 50. Most will ask you to demonstrate how you plan to pay off the loan, if retirement is on the horizon. 

There are still plenty of options - you may sell off an investment property, or draw from your super. Or, you may have shares or other assets you plan to sell.

In the event you find yourself wanting to buy your new home, before selling your current property, you may need to apply for a bridging loan. This is a short term loan, that will provide you with the funds you need to buy your new home before you’ve sold.

They’re designed as temporary solutions - however, it’s worth noting that the interest rate on bridging loans is usually higher than the interest rate on a standard home loan. 

The lender will expect that you will have the capacity to service both of these loans until your property is sold. 
 

Get some advice

At CWCU, we pride ourselves on the service we provide to our customers.

We want to help - and we want you to have a positive experience.

If you’re thinking about refinancing, or downsizing - give us a call and we can talk through your options.

We are invested in our communities - we want to help you achieve your dreams!

 

Contact us to arrange a deal

Get a great deal on your home loan