Loans for your next home
The financial journey to purchasing your next home begins with our strategic lending advice.
Getting familiar with some financial terminology can give you a leg up on your journey.
Navigating a pathway to purchase your next home will mostly depend on your plans for your existing home. Some will look to sell their current home and use the sale proceeds to assist with buying their next home, others might look to retain their current home as an investment and use available equity to purchase a new home.
Your first point of call should be to speak with one of our Mortgage Brokers to establish your equity position, borrowing capacity and in turn your purchase capacity. Our specialist team can help you determine which of the following pathways is suitable for your requirements, or if there is an alternative avenue to consider:
- Subject to Sale – Selling your existing home to buy your next home
- Bridging Finance – Buying a new home prior to selling your existing home
- Transition to Investment – Retaining your existing home as an investment and using equity to purchase your new home
Subject to sale
For many Australian homeowners, upgrading or downsizing to your next home will involve the sale of your current home to assist with the next purchase. A ‘subject to sale’ scenario basically entails that you will sell your existing home prior to buying your next, ensuring you have your sale funds ready to assist with buying your next home.
In an ideal world, you could sell your current home and settle on your next home the same day, however in reality that can be somewhat of an awkward timeline. Without a simultaneous settlement day, you may be in a position where you temporarily need to find accommodation before the settlement and moving into your next home.
It’s wise to chat with a Bernie Lewis Home Loans Mortgage Broker before you commit to a subject to sale strategy, as you will need to understand the implications around lending approval, making purchase offers with conditions, and how settlement can be finalised.
Bridging Finance will allow you to purchase your new home before you sell your existing home. This is a great option to ensure you don’t miss out on your new purchase.
Bridging Finance is a great opportunity if, for instance, your current home isn’t quite ready for sale, it can give you some extra time to get your home ready looking spectacular and on the market. Importantly you won’t be tempted or intimidated into settling for a smaller offer on your current property because you are anxious to get into your new home or you have a Real Estate Agent who is pushing for a sale. So essentially Bridging Finance gives you time.
Lender’s policies vary, but most usually allow six months to sell your existing home. Lenders may need you to make interest only payments on your existing home and your new home in addition to costs for the purchase, or they may allow you to capitalise these charges to the eventual payout amount on your existing home loan. It is really important to understand how a particular bridging product works, and how that will concern your repayments and net sale proceeds.
Transition to investment
A common way to buy your next home is to turn your existing home into an investment property, utilising the available equity to assist with the purchase of your next home. This is a popular way to expand your wealth portfolio or to maximise taxation benefits by transitioning your current home to an investment, should you have the borrowing capacity and equity position to facilitate the next home purchase.
It’s important to identify the benefit of owning an investment property, a decision that should be well guided by a Bernie Lewis Home Loans Mortgage Broker and your accountant.
Your home loan
Purchasing your next home is an exciting time and certainly one you’d like to make with confidence. Obtaining your home loan pre-approval will give you both peace of mind and allow you to focus on the exciting part of searching for your first home.
There are a few lenders who provide home loan pre-approval, and whilst it gives you an approximate guide of how much you can afford to borrow, it is still conditional on a lender approving the home you purchase, a satisfactory property valuation, and Lenders Mortgage Insurance approval (if applicable).
Real Estate agents and vendors may look favourably upon your pre-approval when placing your offer, as it’s a great first step in gaining full home loan finance approval and reflects your commitment to purchasing your potential home.
What does a
- Establishing your home loan needs and requirements
- Providing evidence of your income, savings, debt, and expenses
- Assessment of your borrowing capacity and purchase scenarios
- A valuation of your existing home to determine available equity
- Choosing a lender and product suitable for your needs and requirements
- Lodgement of your application with the lender that you’ve chosen
- The lender’s assessment of your application and pre-approval decision
Your first home loan is a journey. Wouldn't it be nice if you had an expert guide who would give you a hand in making the best decisions and avoiding the pitfalls?
Well that is exactly what Bernie Lewis Home Loans brokers do. In fact we have been doing this for decades. Best part – it doesn’t cost you anything extra. So what are you waiting for?
Bernie Lewis was a great help when it came to assisting us with upgrading the family home. I found buying our second property significantly more complicated and daunting than our first. They assisted with options and realistic scenarios, which were tested when we presented potential homes to them. When we settled on our purchase, they presented a competitive loan and we are more than satisfied with the service. Bernie Lewis was super easy to do business with and we appreciate their help.
Happy Home owner
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Household Expenditure Measure (HEM) is a measurement tool used by lenders to approximate living expenses. This tool helps to determine your available income which may be used to calculate how you can repay a home loan. HEM is a figure that represents the average dollar amount that households spend each year. There are different HEM categories and your mortgage broker and lender will match you to a corresponding HEM category.
If you sit back in fear of properties going to auction and avoid these properties, you are going to miss out on a lot of good buying opportunities. The best properties are usually offered for sale by auction.
There are a number of factors that you need to take into consideration when selling your home and choosing the right real estate agent and one that will be the ‘best fit’, is always a difficult decision.
Lending terminology explained
The following is a list of terms and their meanings that you may come across when purchasing a home and arranging a home loan.
This is the person who acts on your behalf for the purchase of the property. They will attend the settlement and ensure that you get clear and unencumbered title or ownership of the property. They may also conduct various searches of the title to ensure that everything is in order as well as collect and disburse all funds in the transaction and provide you with your detailed settlement statement. A solicitor can also perform this function.
When you sign a contract to purchase a property, you then have until midnight two clear business days later to cancel the contract without penalty. Any deposit paid will be refunded in full.
A property purchased at auction does not have cooling off rights. Cooling off rights can also be waived by signing the appropriate document prepared by a solicitor. This is generally done for a property going to auction and purchased prior to the auction.
The lender who is providing the loan and therefore holds the mortgage on the property.