Most Australian's look to upgrade and up-size their home as their family grows in size. Whatever your reason is, we've made a list of 10 things to consider before deciding to upsize your home.
1. Do I NEED to upsize my home?
Know what your motivation is. Do you need to upsize because your family is growing therefore you need more space? Or you just want to upsize because it’s your dream to live in a larger house?
2. How many rooms do I need?
When thinking of upsizing your house, you should know how many rooms you will need in the future. For example, at the moment you only have two children, but do you plan to have more kids in the future? What about getting a family pet? Make sure that you consider these things when looking at a bigger house.
3. How much can I borrow?
While an online mortgage calculator can give you a rough estimate of your borrowing power, it’s still best to talk with your lender to see how much you can borrow for a new home. This will also give you the opportunity to see if your current home loan is right for you, or if it’s time to refinance or consolidate your loan.
4. Can I pay the higher mortgage repayments?
A larger property comes with a larger loan, hence higher mortgage repayments. You need to determine if you will be able to afford a larger mortgage repayment now and in the future.
5. Can I afford the larger expenses?
Upsizing your home will mean that the expenses will be higher compared to your previous home. Your utility bills will be higher, as well as repairs and maintenance costs and home insurance. Consider all of these factors to determine if you are financially capable to pay all the higher expenses.
6. Do I know the other costs of upsizing?
Other than the higher mortgage and higher expenses, have you considered the other costs of upsizing your home? Other costs of upgrading will involve things such as a larger stamp duty bill, Lender’s Mortgage Insurance if you’re borrowing more than 80% of the property value, and the costs of moving your things to your new bigger house.
7. What are the costs of renovating a house?
This can sometimes be a cheaper option if you can’t afford the expense of upsizing. You can instead opt to renovate your current house by extending it. Bear in mind that renovating your home may add up in cost, so it's best to get some plans and a few quotes first before you decide on what you want to do.
8. Am I ready for the responsibilities?
With the higher expenses from the mortgage repayments to the utility bills, there are also more responsibilities with a larger house. You may need to maintain a larger yard, fill a room with more furniture, plus there are more rooms to clean and maintain.
9. Where do I want to be in the long term?
Moving to a larger house is a really big decision. So this decision should be made on where you see yourself and your family in the long-term. Choosing the right neighbourhood and location will be a big factor when making this decision.
10. Will I stay in the new house for a long time?
Keep in mind that selling a house that’s big will be harder to sell because not everyone is looking to buy a larger and more expensive home. Selling a larger house will more than likely take more time compared to a mid-sized property.
With many things to consider when making the decision to upsize your home, it’s important that you arm yourself with the best knowledge. It's a good idea to contact your lender or a financial adviser to help your review your financial situation before making a decision.