As life changes and living arrangements follow suit, you may find yourself needing – or wanting – to upsize or downsize your home.
Perhaps you’ve a growing family or have just had a promotion with a wage increase and feel it’s time to upgrade. Or maybe your children have flown the nest, or you’re preparing for retirement and want to downsize.
Whatever your reasons for moving on, how this impacts your current mortgage depends on many variables.
Impact on mortgage amount
When homes are outgrown, a new, bigger home will typically cost more, and you’ll need a bigger mortgage. This largely depends on location, and how much you have to put towards the deposit.
Naturally, if you’re downsizing, the cost will usually be less, and you’ll need a smaller mortgage – unless you’re able to buy your new property outright and don’t need a mortgage at all.
Changes in monthly mortgage repayments
Your monthly mortgage repayments are likely to be more if you upsize and less if you downsize. By how much depends on your current property and new property, plus any additional funds you’re putting towards the deposit.
Interest rates, loan terms and equity can also affect the difference in monthly cost.
Interest rates and mortgage loan terms
Finding the deal that’s most suitable for you – the type of mortgage, its term (length) and interest rate – is wise. A mortgage is one of the biggest financial commitments most of us make, so it’s important to be prudent. The deal you secure is likely to have a big influence on your financial standing for quite some time. Compare mortgage deals or talk to a broker who understands, and has access to, the whole market.
Be mindful of mortgage affordability. It’s about being able to afford your monthly repayments comfortably, along with any other financial commitments you may have.
