How this lending option works
Upgrading is often a timing and structure decision as much as a borrowing decision. We model what happens if you sell first, buy first or retain the existing property, then compare the funding options and risks.
- Assess available equity
- Plan purchase and sale timing
- Structure the new and existing lending
Buy first, sell first or use bridging finance?
Selling first can provide certainty about available funds but may require temporary accommodation. Buying first may give you more control over the purchase, but it can create a period of higher debt and holding costs. Bridging finance may help where the lender is satisfied with the proposed sale and end position.
Using equity toward the next purchase
Usable equity depends on the lender's valuation, permitted loan-to-value ratio, servicing assessment and existing loan balance. We consider whether a separate equity split is appropriate for the deposit and costs, and how the remaining debt should be structured after sale.
- Estimate sale proceeds conservatively
- Allow for selling, purchasing and moving costs
- Protect flexibility if settlement dates change
Keeping the existing property as an investment
If you plan to retain the former home, we test the combined debt, expected rent, cash flow and lender exposure. Tax consequences and the purpose of each loan split should be discussed with your accountant before funds are moved or loans are restructured.
Common questions
Can I buy another home before selling my current one?
Potentially. The lender will assess the peak debt, available equity, your ability to meet commitments and the proposed exit from the bridging period.
How is usable equity calculated?
It is broadly the amount a lender is prepared to lend against the property, less the debt already secured by it. Valuation, policy, servicing and the purpose of funds all affect the amount actually available.
Can I use equity for renovations before moving?
It may be possible through a loan increase, separate split, refinance or construction-style facility. The suitable option depends on the scope, cost, valuation and whether progress payments are required.
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