Moving To A New Home

When considering whether or not to purchase your next home you may have many questions, like where do I start? , What do I need? A good place to start is with a Mortgage Broker. This way you can learn the different options that are available to you. Once you know these options, you can make an informed decision on the best option for you when its time to purchasing your new home.

There are many options when deciding to move home. These options are not applicable to everyone, so it is important to get some advice from your Mortgage Broker to see which option suits your financial situation. Lets have a look at four mortgage options, when considering whether or not to buy your next home -

Selling Your Current Home First.

Some people prefer this option, as it take alot of the 'what if's' out of the equation. The 'what if's' for example are -

How much will my current home sell for?
How long will it take to sell my current home?
What will my new mortgage be and how much are my repayments on your new home loan?

At least if your home has been sold, or you have an offer on it (with the finance approved for the buyer of your home) your Mortgage Broker can work out how much money you will have left over to put towards your new home, after calculating fees, like Real estate agent selling fees, Transfer stamp duty, settlement agent fees, etc on the sale of your existing home, and purchase of your new home. This way you will know how much your new home loan will be, taking away any guess work, like how much your current home will sell for.

Some advantages and disadvantages of selling your home before your buy your next home.

Advantages -

You will know how much your new home loan will be and where you stand financially when you move into your new home.
Your current home would be sold, thus taking the pressure out of maybe taking a lower offer for sale on your current home.
Selling your home first might save you money, as bridging or home to home finance can be expensive.

Disadvantages -

You may already have found your new home, and it could be sold by the time you are ready to make an offer on it.
If you have sold your home you may have a period of time where you might not have a home, thus needing to either rent a property, or live with friends or family, till your new home is ready to move into.

Bridging Or Home To Home Finance.

Bridging or home to home mortgages are the same things, just different terminology. These types of mortgages basically increase your current home loan to buy your new home. You may be able to borrow the fees too, like the transfer stamp duty on your new home. You may also have the option of borrowing some extra money to help with the repayments, during the 'bridging' finance period. Once your current home is sold, the funds from the sale will pay down your home loan, and you will end up with your new loan. The 'bridging' part of the home loan, is the period when you have a mortgage on both homes.

Most banks and lenders do offer bridging finance. It is important to note, that there are different rules with each bank or lender when it comes to bridging finance, so it is advisable to speak to your Mortgage Broker first, and learn all the options that apply to your situation. It too is advisable to consider having your 'bridging' finance pre approved, as this will give you some comfort as you begin to look for your new home.

Bridging finance is generally a little more expensive, as most banks or lenders won't discount your interest rate during the 'bridging' period of your home loan. The standard variable interest rate of a particular bank or lender, is generally the interest rate during the 'bridging' period of your home loan. Some banks and lenders too, may increase the interest rate after a certain period of time(eg. 3 months) during your 'bridging' finance period.

Once your 'old' home is sold, the funds from the sale will be used to pay down the 'bridging' home loan, thus ending the 'bridging' part of your home loan. At this stage, you will have your new home loan, and if applicable, a cheaper interest rate than 'bridging' finance offers.

Some advantages and disadvantages of bridging or home to home finance -

Advantages -

You may be able to purchase your new home before you have sold your current home.
You may be able to move straight into your new home without the need to rent or stay with friends or family.

Disadvantages -

Harder to work out exactly how much your new home loan will be, as your current home hasn't sold, and you wont know how much is will sell for.
You will be paying home loan interest on both mortgages, during the 'bridging' period, so the interest repayments will be more expensive during the 'bridging' period of your home loan.

Subject To Sale Offer On Your New Home

When considering purchasing a new home, another option is to put a 'subject to sale' offer on your new home. This is an offer to purchase your new home that states your current home will be sold, before your offer on the new home is formalized. It is important to speak to the real estate agent that you are considering buying the home from, as the owners of that home may or may not accept your 'subject to sale' offer, as its conditional to your current home selling. You may want to ask for an 'exclusion' period too. This is a period of time where the home you have made the 'subject to sale ' offer on, is not advertised, so no other offers can be made on your new home. Without this 'exclusion' period, the home you have made the offer on, may still be advertised, have home opens, and another offer can be made and accepted. The 'subject to sale' offer, is generally not as attractive to the sellers of a property, so if this is something you are thinking about, it is advisable to speak to the real estate agent selling the home. They will let you know what the sellers are prepared to accept.

Some Advantages and disadvantages of a subject to sale offer on your new home

Advantages -

You may have the offer accepted, giving you time to sell your current home.
No need for bridging finance, as the offer is subject to the sale and settlement of your current home.

Disadvantages -

Harder to work out exactly how much your new home loan will be, as your current home hasn't sold, and you wont know how much is will sell for.
The subject to sale offer is not as attractive to the sellers, as they wont know how long it will take to sell your home, and they may prefer to wait for an offer subject only to finance approval.
The home you may have made the subject to sale offer on, may still be up for sale, and if another offer is accepted, your offer maybe closed.
You may feel pressured to accept a lower offer for the home you are selling.

Keeping Your Current Home As An Investment Property.

An option when thinking of purchasing a new home, is keeping your current home as an investment property. It is recommended that you speak to your accountant or financial advisor first, as to discuss the best option if you were to consider having an investment property. Once you have the financial advice, then its time to speak to a Mortgage Broker, to discuss the mortgage options available to you. There are many things to consider, like your repayments, do you have enough equity to keep your home and purchase a new property.

If you would like some more information on what mortgage options maybe available to you, if you are considering moving to a new home, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.