Take the next step towards buying your second property. 

Maybe you want to take the next step to becoming a real estate mogul, or maybe you just want to sell where you are now and buy somewhere bigger. Either way, when your circumstances allow it, it’s totally doable. Just make sure you do your research and make well-informed decisions.

The extra dollar’s in the detail.

Whether it’s a holiday house or a rental, if you’re buying a second property you’ll likely need a home loan. While your lender treats a second property in just the same way as a first property as far as mortgages go, the good thing is you may not need another deposit because you could use the equity in your existing home instead. This depends of course on the value of the second home and the amount of equity you hold in the first.

If you’re selling your home to buy another home, you can use the proceeds from the sale as the deposit. Keep in mind though that if the cost of the new home is large, the deposit required may be more than the equity you release in the sale of your home. In this case, you’ll need to add some cash as well.

Buying a rental

A rental property can be a smart financial decision. If property prices rise, you might make a capital return on the investment and you might be making some income from rent too.

That said, it’s important to make rational decisions. You might fall in love with a property, and it might love you back, but that doesn’t mean it’s going to make you money. After all, you won’t be living there.

It’s worth thinking about where you want to buy your rental property, as the location will likely differ to where you’d buy your own home to live in. To help decide if a property is right for you, you can use property reports to assess local markets and house values.

You could use the equity in your current house towards a deposit for your next property.

We’re gonna need a bigger house

If you’ve decided that your current house isn’t quite cutting it and you choose to upsize, it’s important to consider the on-going cost of maintaining either property. Calculate how much you currently spend on your mortgage, insurances, maintenance, rates, commuting and other expenses. Calculate expenses for all your property options to help ensure you buy the right house to fit your financial situation.

Selling and buying - simultaneous settlement.

Same day, simultaneous settlement is the ideal situation. It means that the sale of your current home and the purchase of your new home happen on the same day and the funds simply move from one loan to the other. It can be tricky to organise, but it means you won’t have to pay two mortgages at once, or rent a place in between selling and buying. Talking to your Home Loan Specialist and settlement agent to see if simultaneous settlement is possible will be your first step.

Remember to keep in mind the costs associated with buying and selling a house and factor these in to your budget.

The holiday home.

If you have enough equity in your existing home, you might be able to use this as your deposit on a holiday home. If not, you may need to top it up with a cash deposit. Remember there are costs involved in a second property, as you’ll now have two sets of rates and insurances etc to pay. Make sure you budget from the outset for all the expenses your second property will incur.

Speaking to the right people and getting the right information can make the process a lot smoother.

Things to keep in mind.

Buying and selling properties always involve costs. You’ll need to allow for the additional costs of stamp duty, settlement and other fees. As a rough guide, these costs could be around 5% of the purchase price, depending on your individual situation. Other costs might include Transfer of Land Stamp duty, Settlement Agent/Conveyancer fees, government registration and search fees, plus bank fees.

Make sure the research is real.

Speaking to the right people and getting the right information from the beginning can make the process a lot smoother when it comes to buying your next home. You might consider: 

  • Talking to your Home Loan Specialist.
  • Having your current home valued.
  • Check out different neighbourhoods you’d consider buying in.
  • Research the local market you’re interested in.
  • Look at property reports.

Doing these things can give you a head start on making the right decision.

Find a home loan to suit you. 

Browse our range of home loans 

See how an expert can help you.

Get in touch with one of our Home Loan Specialists, and they’ll respond within one business day.

Things you should know

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. To the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48123123124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.