Buying your next home
The hard part of moving is rarely the loan. It is the sequencing — whether you sell first and risk being without a home, or buy first and risk carrying two.
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The sequencing decision
Almost everything about moving comes back to one choice.
Selling first
You get: certainty. You know exactly what your budget is, you have the funds, and your offers are clean and unconditional. Sellers prefer that, which can win you a property.
You risk: needing somewhere to live. Rental in between, moving twice, storage. And if the market moves up while you are looking, your budget buys less than it did.
Buying first
You get: the property you actually want, without the pressure of a deadline.
You risk: owning two properties. If yours takes longer to sell than expected, or sells for less, you are carrying two loans on one income. That is the scenario worth stress-testing honestly before you commit.
Doing both at once
Simultaneous settlement is the ideal and is genuinely achievable, but everything has to align — and it depends on the other parties in both transactions, none of whom you control. Worth aiming for, not worth relying on.
Buy first or sell first is the whole decision. It turns on your equity, your capacity and your tolerance for moving twice. Book a free chat and we will work through which one your situation actually supports.
Bridging finance
Bridging covers the gap when you buy before you sell.
How it works: the lender advances the new purchase while you still hold the old loan. Your total debt — sometimes called peak debt — is both loans combined. When the old property sells, the proceeds pay down peak debt and you are left with the ongoing loan on the new property.
What lenders look at:
- Peak debt against the combined value of both properties
- Expected sale proceeds, usually assessed conservatively
- End debt — what you will owe once the sale completes — and whether you can service that
- The bridging period, commonly six to twelve months, within which the old property must sell
During the bridge, many lenders capitalise the interest on the outgoing loan rather than requiring you to pay both. That helps cash flow but increases the debt.
Where it goes wrong: the old property does not sell within the bridging period, or sells for materially less than assumed. Then you are refinancing under pressure, or reducing the price under pressure. Bridging works best when there is genuine margin between the conservative sale estimate and what you need.
What happens to your existing loan
Options, roughly in order of how often they apply:
Discharge and take a new loan. The usual path. The old loan is paid out at settlement, you take a new one on the new property. Clean, and lets you reassess the market.
Port the loan. Some lenders allow you to move an existing loan to a new property — substitution of security. Useful if you are on a fixed rate you want to keep, or if breaking would attract significant costs. Usually requires simultaneous settlement, and if the amount changes it may be assessed as a new application anyway.
Keep the old property and rent it out. Instead of selling, retain it as an investment. This changes the assessment considerably — the existing loan becomes an investment loan, the rental income is shaded, and both loans are assessed against your capacity. Whether it stacks up is a lending question and a tax question. See investment property.
Upsizing
The trap: assuming that because you have equity, you can borrow more.
Equity is not capacity. A large deposit from the sale of your current home does not increase what a lender will lend you against your income. If your income has not grown proportionally with the property you are moving to, the answer may be smaller than you expect.
Also worth counting:
- Stamp duty on the new purchase — usually the largest transaction cost, and first home buyer concessions do not apply
- Agent commission and marketing on the sale
- Legal and conveyancing costs on both sides
- Moving costs, which are always higher than budgeted
- LMI again, if the new loan is above 80% of the new value
Downsizing
Financially simpler in most cases — you are usually releasing equity rather than taking on more debt. Two things still catch people:
Borrowing capacity is still income-based. If you are retired or semi-retired, even a modest top-up loan can be harder to obtain than expected, because assessment is on income and not on the substantial equity you hold. If you need any lending at all as part of a downsize, check it early.
There may be superannuation rules relevant to the proceeds of selling a home you have held a long time. That is squarely a financial adviser and accountant question, and the answer can be worth a lot. Ask before you sell.
A workable order
- Establish your borrowing capacity on your current income — before you look at anything
- Get a realistic sale appraisal on your current property, from more than one agent
- Decide the sequencing deliberately, having stress-tested the buy-first scenario
- Understand what the existing loan can do — port, discharge, or convert to investment
- Count every transaction cost, not just the price difference
- Then start looking
Common questions
Should I sell first or buy first?
Selling first gives you certainty about your budget and a clean settlement, at the cost of possibly needing somewhere to live in between. Buying first means you secure the property you want but carry the risk of owning two homes if yours takes longer to sell than expected. Which is right depends far more on your financial buffer and your tolerance for that risk than on market conditions.
What is a bridging loan?
Short-term finance that covers the gap between buying the new property and selling the old one. You end up with both loans temporarily. Lenders assess against the combined debt and against the expected sale proceeds, and they set a bridging period — often six to twelve months — within which the old property must sell.
Can I keep my existing loan and just move it to the new property?
Sometimes. This is called porting or substitution of security, and it can preserve a fixed rate and avoid break costs. Not all lenders allow it, timing usually needs to be simultaneous, and if the loan amount is changing it may amount to a new application anyway.
Do I have to pay lenders mortgage insurance again?
If the new loan is above 80% of the new property’s value, yes. LMI is generally not transferable between loans or lenders. Having paid it once does not exempt you from paying it again, which surprises a lot of people upsizing into a more expensive property.
I am downsizing. Is there anything specific I should know?
Two things. Borrowing capacity is assessed on income, not on equity — being asset-rich and income-light can make a modest loan harder to obtain than expected, particularly if you are retired or approaching it. And there may be superannuation contribution rules relevant to proceeds from selling a long-held home. That is a financial adviser and accountant question, and worth asking before you sell rather than after.
Have a question about your situation?
A first conversation costs nothing and commits you to nothing. Even if the answer is "wait six months", you will know why — and what to do in the meantime.