Navigating property upsizing: What are the options?

Upsizing to a bigger property is an exciting life milestone, whether you’re seeking more space for a growing family, a better location, or simply a lifestyle upgrade. However, moving to a larger home involves careful planning, financial considerations, and understanding the available financing options. 

What does property upsizing mean?

Property upsizing means selling a smaller current home and buying a larger one. Every day, thousands of Australians are motivated to upsize for more space and amenities or desire a different neighbourhood. 

While the idea of a bigger home is appealing, it comes with its own set of challenges and considerations:

• Financial readiness: Assessing your financial situation to ensure you can afford a larger home.
• Market conditions: Understanding the current real estate market to make informed decisions.
• Timing: Coordinating the sale of your current home with purchasing a new one.
• Financing: Exploring different financing options to facilitate the move.

Financing options for property upsizing

There are several financing options available to support your property upsizing journey. Here are some of the most common ones:

Traditional mortgages

A traditional mortgage is a long-term loan from banks or financial institutions that helps individuals purchase residential properties. It is a popular financing option for upsizing, but it may not always be the most prudent choice. Benefits of traditional mortgages include:

• Long-term stability: Fixed interest rates offer predictable monthly payments
• Lower interest rates: Generally lower rates compared to short-term loans
• Wide availability: Easily accessible through various lenders

Bridging loans

Bridging loans are short-term financing solutions that help bridge the gap between purchasing a new property and selling an existing one. For example, Funding’s Bridging Loans provide immediate funds, allowing borrowers to secure new properties without waiting for their current properties to sell.Benefits of bridging loans include:

• Quick access to funds: Ideal for urgent property purchases
• Flexibility: Can be used for residential, commercial, or investment properties
• Short-term solution: Typically repaid within 6 to 24 months, reducing long-term financial commitment

Home equity loans

A home equity loan enables you to borrow against the equity in your current home, providing the necessary funds for a down payment on a new property. Benefits of home equity loans include:

• Lower interest rates: Often lower than other types of loans due to the secured nature of the loan
• Tax benefits: Interest payments may be tax-deductible
• Lump-sum payment: Provides a substantial amount of money upfront

Savings and investments

Another option for financing a larger home purchase is to use personal savings or liquidate investments, avoiding additional debt but requiring sufficient funds to cover the cost. Benefits of using savings and investments include:

• No debt: Avoids the burden of loan repayments
• Immediate funds: Quick access to money without waiting for loan approval
• Financial freedom: No interest payments or loan terms to worry about

Advantages of property upsizing

Property upsizing offers several benefits that make it an attractive option for many homeowners:

• More space: One of the primary reasons for upsizing is the need for more space. A larger home can provide additional bedrooms, larger living areas, and more storage, improving your overall quality of life.
• Better amenities: Upsizing often means moving to a home with better amenities, such as a larger garden, a swimming pool, or a modern kitchen. These features can enhance your living experience and increase the property’s value.
• Improved lifestyle: A larger home in a better neighbourhood can lead to an improved lifestyle, which could mean better schools for your children, closer proximity to work, or access to recreational facilities.
• Potential for future growth: A larger home offers more potential, whether accommodating a growing family, hosting guests, or creating a home office. It can also be a wise investment if property values increase over time.

Get started

Property upsizing is an exciting opportunity to enhance your living space and lifestyle. Understanding the financing options available, such as traditional mortgages, bridging loans, home equity loans, and using savings, can help you make informed decisions and facilitate a smooth transition. By leveraging the right financing solution, you can achieve your property goals and enjoy the benefits of a larger home.

Learn more about property upsizing

For more information on how bridging loans can support your property upsizing journey, visit Funding’s Bridging Loans page. Additionally, explore this comprehensive guide on property upsizing options in Australia.