Question 1

Can I buy a new house before I sell my old one?

Accepted Answer

Yes, this is possible through a Bridging Loan. This allows you to own two properties for a short period (usually up to 12 months) while you sell your original home.

Question 2

What is loan portability?

Accepted Answer

This is a feature that allows you to take your existing loan product (including the interest rate and account number) and transfer it to a new property, potentially saving you thousands in exit and application fees.

Question 3

How much deposit do I need for my next home?

Accepted Answer

Ideally, you can use the equity from your current home as your deposit. I can help you calculate your "usable equity" to see if you have enough to avoid Lenders Mortgage Insurance (LMI).

Question 4

What happens to my current mortgage when I sell?

Accepted Answer

When you sell your home, your existing mortgage must be "discharged" (paid out). The proceeds from the sale are used to pay off the loan balance. Whatever is left over is your profit (equity), which you can then use as a deposit for your next home.

Question 5

Do I need to pay Lenders Mortgage Insurance (LMI) again?

Accepted Answer

It depends on your deposit size. LMI is not transferable. If you borrow more than 80% of the value of your new property, you will likely need to pay LMI on the new loan, even if you paid it on your old one. I can help you calculate if you have enough equity to avoid this cost.

Question 6

Can I keep my current home as an investment property?

Accepted Answer

Absolutely. This is a popular wealth-building strategy called "rentvesting" or simply holding. We would need to investigate your borrowing power to ensure you can service both loans (your new home debt and your old home debt). We can also look at restructuring your old loan to an "Investment" product to maximize tax benefits.

Question 7

How long does a bridging loan last?

Accepted Answer

Most lenders offer bridging periods of up to 12 months for a standard home (and sometimes less for construction). This gives you a year to sell your existing property. During this time, you typically only pay interest on the "peak debt" (the total of both loans), and often this interest is capitalized (added to the loan) so you don't have to make repayments until your house sells.

Question 8

What costs can I include in my new loan?

Accepted Answer

Depending on the lender and your Loan-to-Value Ratio (LVR), you may be able to borrow extra to cover costs like Stamp Duty, LMI, and legal fees. However, most lenders prefer you to pay these upfront. I can investigate which lenders offer the flexibility to capitalize these costs if your deposit is tight.

Question 9

What is a 'simultaneous settlement' and how does it work?

Accepted Answer

This is the ideal scenario where the sale of your old home and the purchase of your new home happen on the same day. The funds from your sale are transferred directly to your new purchase. It requires careful coordination between your solicitor, your bank, and me (your broker) to ensure both transactions align perfectly.

Question 10

How do I calculate my 'usable equity' for the next purchase?

Accepted Answer

Your usable equity is generally 80% of your current home's value, minus your existing mortgage balance. For example, if your home is worth $800,000, 80% is $640,000. If you owe $400,000, your usable equity is $240,000. I can arrange a professional valuation to give you an exact figure.

Question 11

Can I use my current home as security for the new loan?

Accepted Answer

Yes, this is called "cross-collateralisation." It allows you to use the equity in both properties to secure the new loan, potentially avoiding LMI. However, it does link the two properties together financially, which can reduce flexibility later. I can explain the pros and cons of this strategy versus keeping the loans "standalone."

Question 12

Does changing jobs affect my ability to get a new home loan?

Accepted Answer

It can. Lenders typically like to see stable employment (usually 3-6 months in a role). However, if you are moving to a similar role in the same industry with no probation period, or if your base salary has increased, many lenders will view this favourably. It's crucial we investigate this before you make an offer.

Question 13

What if my home sells for less than I expected?

Accepted Answer

This is a risk with buying before selling. If your sale price is lower, your usable equity decreases, which might increase your required loan amount or LVR (Loan to Value Ratio). We always "stress test" your borrowing capacity with a conservative sale price estimate to ensure you have a safety buffer.

Buying a new home, downgrading, upsizing?

I’m here to help

The Upgrader’s Dilemma Which comes first: buying or selling?

Investigating the Right Strategy for Your Move

Accurate Borrowing Capacity

Bridging Loans

Loan Portability

Fast Pre-Approval

Understanding the “Changeover Costs”

Make Your Move Stress-Free

Common Questions About Buying a New Home