NEXT HOME BUYER
Congratulations on searching for your next home! Whether you are upsizing or downsizing your home, it’s an exciting time.
As you’ve purchased a property before you no doubt have a good idea what’s involved in the home loan process. However, transitioning between purchasing a new home and selling your current one may be new to you. You may need to navigate finances associated with two properties and home loans, or you could be turning your current home into an investment property and needing access to its’ equity to buy your new one.
- Access Equity
- Bridging Loans
- Deposit Guarantees
- Refinance
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In Focus
Funding a Deposit
If this is your second home purchase or more, than hopefully funding a deposit is not as difficult as it was the first time around.
There are multiple ways you can get together the needed funds to buy and settle on your next property. Whether you’re keeping or selling your current property will also affect what method you pick.
Utilising equity – If you’re keeping your existing home and converting it to an investment property then you may be able to access the current equity you have accumulated and use this to fund or part fund your deposit.
Sale of your home – If you have already sold your current home you may have a good bank balance which will permit you to pay for your deposit and associated purchasing costs.
Deposit bond – A deposit bond or guarantee can be up to 10% of the purchase price and acts as a substitute for the cash deposit that is needed when you sign the contract of sale. If you’re currently waiting for your home to settle so that you can access the funds from the sale, or your money is tied up elsewhere e.g. the money is in shares, term deposits or other investments, you may be able to access a deposit bond to help you buy your new home. There is typically a flat fee paid to access a deposit bond. This cost is a percentage of the deposit amount being guaranteed. To work out how much your fee would be you can use this calculator from Deposit Power.
Savings/Investments – Of course, you can tap into your savings or dilute investments to pay for the property.
Loan Types
When purchasing your next home you may want to look at other kinds of loans to what you had for your first one. It will depend on what your conditions are and what type of property you are purchasing.
Here are some types that may be relevant to you; however there are other loan types also so talk to your broker about what is best-suited for you. Feel free to give us a call on,0290300637 use web chat or fill in our contact form and we will give you a call according to your convenience.
1
Bridging Loan
A bridging loan allows you to buy a property without having to sell your existing property. If you have decided to build your next home, this could be a good option for you as it will enable you to live in your existing home until the new one is ready to live. Such type of loan is typically for 6 or 12 months if your new property is being constructed. During the term of the loan you can make interest-only payments.
2
Principal and Interest Loan
This is the most common loan type and is where your repayments are divided into two parts. The first part of the payment goes towards paying the interest that has accrued during the month; anything left over comes off the principal or original amount you borrowed from the lender.
Ask a Broker
As you start looking at what finance is required for your next home, it is a great idea to think about what you need and talk to your broker as early as possible. Following are some relevant questions that may be required to ask.
- Do I need to refinance my existing loan to release equity for a deposit?
- Can I stay with my existing lender?
- Can you arrange a deposit guarantee or bond?
- What do I do if the settlement dates (sale and purchase) don’t coincide?
- Do you have access to bridging finance?
- Can my existing lender do bridging finance?
- What sort of loan is perfect for me?
- I need a construction loan, how does this work
- What features should I include in my home loan?
- Can I consolidate debt with this home loan?
- What are the costs included with a new purchase?
- Will I need Lenders Mortgage Insurance (LMI)?
Ask yourself
As you asked some questions to broker, equally there are some questions you should ask yourself too. Before you start chatting with your broker, check the following questions by your own.
- Have you found your new home already or still looking for it?
- How are you going to manage the funds and other expenses of your new home purchase?
- If your loan size increases than you expect before can you afford it?
- Will the home loan be in a single name or in joint names?
- When do you require the money by?
- Are you keeping your existing home and renting it out?
- Have you ever thought about renovating your current home instead buying a new one?
- Do you need to consolidate some debt with this home loan?
- Will your new home be ready to move in or will you need to spend money on it?
- Is there any need for additional funds?
- Are you constructing your next home? If so are you doing this as an owner builder or using a licensed contractor?
Need assistance? Just contact us and we will help!