Undoubtedly living in your current home has given you some pretty clear ideas about what you want from your next home. It may be more rooms, a larger back-yard, nicer outlook or a better neighbourhood. No matter what your reasons for moving on, the following considerations should come into play.

What Mortgage Can You Afford?

Chances are, things have changed since you bought your current home. You will probably have some equity built up in your home and deciding strategically what to do with the cash is something to think about. You may decide to put it all down on a new home or perhaps pay off debt. Your employment and income position may have also changed since your First Home Buyer days.
The first thing to do is to assess what home loan you can comfortably afford. To this end you should obtain home loan pre-approval from the lender of your choice.

Should you keep your first home?

Your prospective lender will be able to advise whether you are in a position to keep both properties or if your should consider selling your current home in order to acquire the next property.  If you are told that you can keep both – the decision is still yours. Property investment is a great way to multiply your wealth, providing you are ready and willing to take on the extra obligations.

Should you buy before selling?

If you have decided that you wish to sell your current home in order to purchase the next one, you are probably uncertain what should happen first – your new purchase or the sale of the existing property.

A great deal depends on the property market you are in. If the market is quite hot and everything advertised sells, it may be better to look for a suitable home to purchase first, before selling. If the market is slow with many homes listed for sale but not selling well – it would then make sense to try to sell your home first before buying.

You may be worried about not having a place to live if your home sells before your next purchase closes? This is a common concern when juggling a sale with a purchase. It could be possible to sell your home first and arrange a 6 or a 12 month rental period with the new buyers while you are looking for a home to buy.

Your Financing Options

If you decide to sell your current home, you may be able to simply take your existing mortgage with you and transfer it to your new property. This is possible if your mortgage is portable. If you do not have deposit funds available for your new purchase as all your equity is tied up in your current home – it may be worthwhile looking at a deposit bonds.

Establishing a line of credit against your current home can help you come up with deposit funds for the purchase of your new home (where you are intending to keep both properties). In most cases we would not advocate putting both properties down as security on a single mortgage. It may create complications if you choose to sell or refinance just one of the properties.