At some point in their lives, most people outgrow the property they love and need to upgrade to a bigger or better home.
Whatever the reason behind the move, this decision should be carefully considered, advises the Rawson Property Group. The most important consideration is, of course, affordability.
“It’s very easy to get caught up in the excitement of a bigger, better or more luxurious property but you have to crunch the numbers to make sure it’s also a good financial decision .”
Homeowners could also consider options like letting their current property instead of selling as, very often, the potential rental income on that property, combined with the equity available in its bond, could provide enough capital for a deposit on the new home.
“That same rental income could then cover the monthly instalments on the original bond on an ongoing basis, while you service your new property’s bond with your own income and any rent money left over.
“If the numbers work out, this kind of set-up can be an ideal opportunity to add an investment property to your portfolio – something you might not have realised was even an option.”
Accurately assessing opportunities like this requires a detailed understanding not only of property prices but also ownership costs and rental dynamics.
Owners can also upgrade their homes instead of selling. “You need to weigh up your ability to add value with the risk of over-capitalising and then compare this to the cost of buying a new home. In some cases, moving on could be a far better decision but renovations might present opportunities you hadn’t considered before,” the group says.