Making the financial decision to upsize your home shouldn’t come with hidden costs that throw you into financial debt. You can make a sound financial purchase by taking out a home loan that is tailor made to help you cover the costs. Whatever reason you are upsizing your home for, there are three questions that you need to ask yourself.
1. Upsizing isn’t cheap. Have you considered the total cost?
Perhaps the reason why you are opting to upsize your property is because of the much need space. However, upgrading to a larger property can cost you more than the price of the property itself. These are just a few costs you need to think of below:
Building and pest inspection reports:
You want to ensure that you eliminate the element of an unwelcomed surprise. Before you move in the building you have purchased you will have to ensure that it is free of any pests, which could cost you from $300 to $600 to have sorted out. This is a small price tag that can save you a lot of money in the long run.
There is an array of fees that you need to pay such as; bank valuation fees, title search fees, application fees, settlement fees, mortgage registration and deregistration fees, discharge fees and preparation of mortgage documents can end up costing you a little over a thousand dollars in fees.
You want to save yourself the hassle of searching the wide Australian property pool for a house that suits your needs, so you enlist the service of an agent who can negotiate the best deal for you. The fees that an agent usually charges are usually 2 to 3% of the selling price of your home.
The list could extend to calculating the cost of stamp duty, legal fees and conveyancing costs, moving costs right down to maintenance costs.
2. How much can you afford to borrow?
You could use a home loan to help meet your upsizing fees. However, when it comes to how much you can afford to borrow, it’s not a one size fits all regime. It all depends on your needs for your new home. Factors that contribute to how much you can borrow are:
- Your annual income.
- Number of dependents you have.
- Monthly expenses.
- Your credit rating.
- The proposed term of the loan.
It is advisable that you speak to your lender to help you find a loan that is suitable for your financial needs and wont cripple you in terms of repayments.
3. Re-asses the purpose for your upgrade
Yes. You might be able to afford to upsize to a new home, and you might be able to get approved for a home loan. However, you need to re-asses if the purpose for your upgrade is necessary in the long run. Is it being purchased with lifestyle improvement goals in mind, or is it for property investments goals that will give you financial returns? You don’t want to be stuck with a property that is a dud if you want to see financial returns, and you don’t want to invest in something that you will not be able to afford because of its increasing costs to maintain.
These questions are not to deter you from reaching your property goals, but it is advisable to speak to an accredited financial lender who will help guide you on the right path to a secure financial future.