1. Making an impulse decision on the property
Since you currently have a home and may be looking to sell it off in the future, it’s best to make a right and well-thought-out decision before moving out. Upsizing your property is usually done with the intention of living there for quite a while so you should think long-term. Will the characteristics of this house suit you and your family? For instance, you shouldn’t stay in an area just because your children are doing primary school there, as they will finish in a maximum term of 6 years.
2. Disregarding long-term factors
Recently got promoted or got a huge pay rise and so you want to upsize? Well, this can be a big matter since you’ll take on more debt as you pay for a bigger mortgage loan.
As soon as most people get financially comfortable, they start looking at ways they can upsize — like looking at getting a bigger house, a new car, or a big-budget renovation. But these are just ways you can get financially uncomfortable again because you're taking on more debt. This leaves you with few opportunities to save for your retirement.
3. Checking your eligibility
Before you go house hunting for your new dream house, you should check your eligibility with the housing loan eligibility calculator. Other than that, you should check your credit report to see if you might have other debts that you aren’t aware of and check if there’s anything incorrectly recorded.
4. Forgetting about financing
Various banks will approve your loan at different rates after assessing your financials. Your DSR is the main thing they look at, some banks let you borrow more and some less depending on their determined DSR threshold. It’s best to get a pre-approved mortgage loan.
5. Consider all the cost
Lawyer fees, stamp duty, renovation, agents commission fees, down payment, furniture, and the list goes on. Before approaching banks to get a loan, you should consider whether you have enough cash/credit to cover all sorts of costs that will be incurred during the process.
6. Neglecting your current house
Surely, you’re very excited to move out to your new and bigger home. But what about your current house? You have to decide whether you want to sell or rent it out. Regardless of the choice that you make, it’s best to keep it tidy and preferably in a good state if you decide to sell or rent it out. The condition of your house will matter because it affects the sale value and rent income. Do not spend all your money on your new house and neglect the old one.
Make a smart move
Sometimes, it’s easy to get carried away by the hype of getting a bigger/better house. Hopefully, these tips can remind you of things that would matter to your decision on upsizing and save you from making costly mistakes that create financial regrets.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
