Understanding Your Home Loan Options for Upgrading
Upgrading your family home in Rockingham is an exciting milestone, whether you're looking for more space, a better location, or modern amenities. When it comes to financing this upgrade, you'll have access to Home Loan options from banks and lenders across Australia, each offering different features to suit your financial situation.
The key to a successful upgrade lies in understanding your borrowing capacity and how different loan structures can work in your favour. Your current home equity plays a crucial role in this process, as it can significantly impact the loan amount you'll need and potentially help you avoid lenders mortgage insurance (LMI).
Making the Most of Your Current Property's Value
Before diving into the application process, it's worth getting your current property valued. The Rockingham property market has seen various changes, and your home's current value will directly affect your loan to value ratio (LVR) for the new purchase.
If your existing home has built up substantial equity, you might be able to:
• Use this equity as a deposit for your upgraded home
• Potentially avoid paying LMI on your new loan
• Access interest rate discounts due to a lower LVR
• Qualify for higher loan amounts
Choosing Between Variable and Fixed Interest Rates
When applying for a home loan for your upgrade, you'll need to decide between variable home loan rates and fixed interest rate options. Each has its advantages:
Variable Interest Rate:
• Rates can decrease when market conditions improve
• Often comes with features like offset account access
• More flexibility for extra repayments
Fixed Interest Rate Home Loan:
• Certainty in calculating home loan repayments
• Protection against interest rate increases
• Typically available for terms of 1-5 years
Many borrowers choose a combination approach, splitting their loan between fixed and variable portions to balance security and flexibility.
The Application Process for Your Home Upgrade
Getting pre-approved for your Home Loan application is a smart first step. Home Loan pre-approval gives you confidence when house hunting and shows sellers you're a serious buyer. The streamlined application process typically requires:
• Recent bank statements (usually 3-6 months)
• Proof of income and employment
• Details of your current financial commitments
• Information about the property you're looking to purchase
Calculating Costs Beyond the Purchase Price
When buying a home in Western Australia, remember to factor in additional costs:
• Stamp duty (varies based on property value and buyer status)
• Legal and conveyancing fees
• Building and pest inspections
• Moving costs
• Potential early exit fees from your current loan
These costs can add up quickly, so it's important to include them when determining your total borrowing capacity.
Timing Your Upgrade Strategy
If you currently have a fixed rate period ending, this might be the perfect time to consider upgrading. You can potentially avoid break fees while transitioning to your new home loan. Alternatively, if staying in your current home and refinancing makes more financial sense, this option can free up funds for renovations or other investments.
Working with Professional Support
Upgrading your family home involves multiple moving parts, and having experienced guidance can make all the difference. A mortgage broker can help you access a wide range of lenders, compare home loan interest rates, and find loan features that suit your specific needs.
At G&T Finance, we understand the local Rockingham market and can help you explore all available options. Whether you need to coordinate the sale of your existing home with your new purchase, or you're looking to use your home equity strategically, our team can guide you through each step.
Upgrading your family home is a significant financial decision, but with the right loan structure and professional support, it can be a smooth transition to your dream property.
Call one of our team or book an appointment at a time that works for you to discuss your home upgrade options.
