New home - New loan
  • Want to upgrade your home to a newer or larger one? It's a good time to re-evaluate your loan options
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Buying a new home for non-first home buyers...

 

This page is for non-First Home Buyers buying or upgrading to a new home. If you're a first home buyer, please visit the first home buyer or 95% home loan pages

If you currently own a home (or previously have) and now want to purchase again, there are a number of ways you can do it. Which way is best is dependant on your individual situation...

 

Upgrading

If you're upgrading your existing home to a new one, you can do it in a number of ways ....

 

Buy First - Sell Later

Buying first and then selling later is preferable to most people because it means you only have to move house once. Your ability to do this depends on whether your income meets the lender requirements and whether you have sufficient equity in your property(s)..

Generally you'll benefit if you can keep your loan % to no more than 80% of the value of your properties during and after the process. For example if your current home is worth $300,000 with a $100,000 loan and you want to purchase $500,000 new home and need ~ a $520,000 loan to buy it. Your total loan during the period where you hold both properties will be ~ $620,000 ($100,000 + $520,000) with a property value of $800,000 ($300,000 existing + $500,000 new). This means your loan% is ~77% which is acceptable to the banks. You will avoid any mortgage insurance premium and minimise any lender restrictions that may come into play with a > 80% loan scenario. Upgrading in this manner gives you more flexibility on decisions on when to sell your original home, whether to rent it out for an interim period, or whether to renovate to improve its value prior to sale etc  assuming your income and equity permits.

If your equity position is not this strong, you can still may be able to undertake such a transaction however you may have a mortgage insurance premium to pay. Alternatively we may be able to find you a lender who'll allow this via a bridging loan (see below).

 

Sell Your Existing Home First – Then Buy Your New Home Later

You may want to sell your existing home first and then buy your new one. This way is likely to give you the best capacity to buy a higher priced new home because you will be starting from a position of less debt (seeing you would have sold your existing property and paid out or down any existing loan) and maximum deposit (remainder of the sale proceeds).

The main downside for going this route is that you will usually be without a property for an interim period of time (unless you manage to arrange simultaneous buy and sell settlements) and will therefore most likely need to find interim accommodation in between.

 

Bridging Loans (a loan that "bridges" the period whilst you sell your previous home)

Various lenders have bridging loans that allow you to do either of these options above however you should be ensure you fully understand the bridging loan you agree to as sometimes they can have some onerous terms and conditions such as a time limit to sell your old home beyond which penalty interest rates are charged. If you are happy with the various conditions of a bridging type loan they may be a good option because sometimes the lender will calculate your serviceability of such loans on the end debt rather than the interim debt.

 

Rent Out The Old Home (keep as an investment) and Buy a New Home (to live in)

A final alternative may be to keep your existing property into the future and convert it to an investment property. This may suit some people who are interested in building a portfolio of property assets. The end loan is larger so generally you will want to be confident you can afford such a situation often is possible because the rent that is received on the new investment property (ie your old home) partially offsets the cost of the loan. Such situations allow higher gearing into the property market which may suit some investors.

 

 

Buy a New Home

If you've previously owned property (but don’t anymore) and now want to buy a home again then some inpageation relevant to first home buyers may also be relevant to you ( First home buyer page).

The main difference between your situation and that of a first home buyer is that you may not be eligible for any stamp duty exemptions (dependent on your state) nor the First Home Owners Grant. This means that your required deposit will likely be higher at various property cost prices compared to a first home buyer.

The total cost price of your property will be the sum of ..

  1. Property Price
  2. Stamp duties payable (some states may still offer some discounts for owner occupied purchases)
  3. Other purchase costs ie conveyancer, loan application fees etc

Since the banks will lend a maxmimum of 95% of the underlying property cost price, the amount of deposit required by you will be equal to 5% of the underlying property cost PLUS stamp duties and any other smaller government charges (ie registrations) PLUS other buying costs (conveyancer, loan application fees etc). For example a $500,000 home purchase in NSW for a non-first home buyer would require about $45,000 deposit. See sample loan report.

 

Home Loan Advice Centre's loan service is provided to you completely free of charge. We can do this because our lenders (30 of Australia's main lending institutions) pay us commissions based on the wholesale volume of loans our group refers to them. We can therefore, offer you our experience and expertise, and guide you through the entire home buying journey, without charging you a cent. You end up with exactly the same loan if you'd organised it through a bank yourself, but we do all the leg work and negotiations with the banks for you ..... a great result!

So if you are looking to buy a home or investment property visit our 5 minute online enquiry page. We'll assess your loan options and send you a full report of your capacity. Also we'll include parts 1 and 2 of our eCourse ... an indepth guide to buying property in Australia. Click to see a sample.

 

For more inpageation please call Home Loan Advice Centre on 02-9210-1000 or see the following links…

 

Application process

How much can I borrow

Repayment calculator

Loan enquiry page