Life evolves and so do our living needs. Relationships change, children appear, grow up (and stay increasingly longer at home), there may be times when we are single, employment opportunity leads to new places … the list is long and as varied as you can imagine…
When property prices stayed flat post GFC, shifting house became very difficult as the deposit for the next home is usually found within surplus from the sale proceeds of the previous.
Now that house prices are moving again, I am finding that many of my clients want to shift home.
It’s stressful enough with worrying about the money…
However, with the right professional advice the process of shifting your loan with your home can be made a little simpler…
For most people the process starts with a Saturday morning coffee, an iPhone and realestate.com (or some such similar). This is always the exciting part; you only want to shift if you can find the next home of your dreams.
A phone call or two later, you get in the car with the “blue line” programmed and a Saturday filled with head spinning as you walk through good houses and bad. Inevitably … maybe over a café lunch and a bottle of wine you settle over the house of your dreams, and you decide it’s for you.
Regardless of the motivation behind wanting to shift, this blog is about the HOW. How can you shift house and shift your loan with you?
The practical side of “how” generally appears in only a few ways…
- You might only want to shift if you can find exactly what you are looking for first.
- You might simply have decided to shift come what may.
- You might decide to shift house and hold on to the current house as a rental.
To keep things simple, I’m going to focus mostly on the first and second points- shifting and selling.
(I will say that if you wish to shift house and hold your current as a rental you must talk to me well in advance as it is crucial to ensure we have the correct loan structures in place – this loan structure will be VERY different from the way we structure finance for a shift and sell.)
So where do you begin in making such a big change to your life? Here are a couple of common options:
– You might want to have an “overlap” allowing you to shift furniture between houses with a touch of convenience. This gives you “two” houses for the overlap period (In this option we need to be mindful of staying under 80% to avoid mortgage insurance and ensuring that your income can support what is called the “peak debt”)
– You might like to sell first so that you know exactly how much you have to spend, sometimes “renting back” your own house while you find your new home. (This option gives you “no” houses for a while but might suit when the budget is tighter as it presents less risk)
– You might decide to be the master of timing and precision, aiming for a simultaneous settlement. This can be a little like hitting a moving duck standing on a revolving platform at a shooting gallery – but with the help of your expert team (agent, broker, conveyancer, and removalist!) we can make that happen too. With expert precision the furniture leaves the old house in the morning and arrives at the new by evening. There is a service these days that packs, unpacks (including your clothes) and even has dinner cooked for your arrival!!
(with this option we need to ensure there are clauses in the contract to give you “wiggle” room just in case something unexpected causes the date of one settlement to change)
At various stages of life, I’ve personally done all of the above… so I understand all of the butterflies you get in your stomach along the way (Can I say runny poo in a blog?) It is comforting to know that your broker has road tested the various solutions!! I will make sure that your worries are unfounded and guide you safely and surely throughout.
The “overlap” option will involve what most people call “bridging finance” – a term from long ago. These days all money comes at the same price and given that there are no exit fees on loans anymore, finance to cover the overlap is generally not difficult to arrange.
The purchase price of your new home and the sale price of your current home will determine the size of your final loan. There will be costs associated with the purchase and costs associated with the sale. I will help you work all of this out so that you feel in control.
Shifting home will involve many things for you to juggle but one that you need not worry about is how to shift your loan. When I began mortgage broking some years ago it was always my hope that I would become “part of the furniture” in your life and that I would have the privilege of being part of the evolution you and your family, by making sure that finding the right loan to suit each stage would never become the “nightmare” story you sometimes hear.
Every situation is different, and it is my job to ensure that we find the right solution for your shift.
If you shift house, settle in and at the housewarming you get to show off your dream home without finance nightmares being mentioned to your friends, then I will have played my part.
My role is to be a valuable, but unseen, member of the team – that is what makes me happy.
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