5 signs it’s time to upgrade from a starter home to your dream home

Posted by Danny Bates on September 7, 2020
Danny Bates
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Sign it is the right time to upgrade your home

There’s a good chance that the home you’re currently living in isn’t necessarily your dream home. It’s not that it’s bad - it’s probably perfect for what you need, or needed when you bought it. But when you have lived in a home for a period of time there is sure to be a few things you’d like to change. You may want a bigger backyard, a walk-in wardrobe or scullery, maybe even an extra bedroom or study.

These are the telling signs that it may be time to upgrade your home. Perhaps when you were just starting your financial journey you bought a house that was an affordable home in a quality neighbourhood and then life happened. Maybe now your mind is focusing on a growing family and you need some extra space? Or perhaps a bigger kitchen and more space for entertaining have never been more appealing. You might have a large family home that needs some love but now that the kids have left you’d like something a bit more modern. The desire to make your dream home a reality isn’t as far fetched as it may have been a few years ago. Whatever your reasons, there are many factors that can point to a growing need to upsize your home.

If you’re wondering when the right time may be to make the move and you're currently contemplating if it’s time to upgrade your home into something a little bigger, nicer, or more practical then we’re here to help. We’ve put together our top 5 signs that should help you make your mind up and take the next step to make that important move up the ladder.

1. Your family’s needs have changed

A growing family is the main reason behind most people’s decision to upsize. Many people find that their housing needs change as their circumstances change, and what used to be the perfect house is now something with which they're struggling. 

This familial need change works in several well-defined stages. First, people start a family and extra space is needed for a nursery or a child’s room as they grow. If the family expands to a second or third child then this need for space only increases. As they grow so does the requirement for extra space both inside and out. 

As these children develop into young adults their requirements for space and privacy are enhanced. They need their own rooms or sleep-outs to establish their independence and things like rumpus or games rooms suddenly become a priority! 

Finally, after all this expansion and the increasing need for space, these children leave home and start their own journey of life. The house suddenly feels empty and quiet and it becomes time to let the memories go and move into a more suitable home.

2. The market is just right

There are two main factors that indicate a house sale is well-timed from a financial perspective. One, when it’s cheap to borrow and a change might mean lower monthly repayments and two when demand outstrips supply enabling prices to increase.

We’re currently in the midst of this perfect storm. It’s never been cheaper to borrow money, with interest rates being so low, but there have never been fewer houses on the market in certain price brackets.

When interest rates are low and the housing market is hot, then there is no better time to put your current home on the market. Right now, realtors across the region are reporting soaring house prices and a shortage of listings which is telling us that there is a huge seller’s market happening. Couple this with record low interest rates (ANZ has dropped its one-year interest rate to a record low 2.79%) and a housing change is a very attractive option right now.

There are a lot of first home buyers looking for an entry-level house. Many are looking for homes under $400,000 in Taranaki due to their eligibility for additional government funding for first home buyers. Homes under $500,000 are also very popular so don’t be disheartened if you're outside of the first home buyer category as it will still be highly sought after!

If you’re looking to downsize then this is a popular time to sell too. Many people have more equity available in their homes due to increased pricing and are looking to upgrade to larger houses.

While it’s never an easy decision to sell the family home now might be a great time financially.

3. You’re fixating on the fixes

Another clear sign that it might be time to see what your property is worth is when you’re focused more on the jobs that need doing rather than enjoying the space you’re in. Homeownership is full of a never-ending tasks list of improvements but if it feels like you’re never making any progress or that the house doesn’t quite feel right then it might be time to move.

Releasing the equity in your home, combined with lower interest rates might mean that the same weekly mortgage payments could service the debt on a home with fewer jobs to tackle.

It may be on your long list of jobs to add in a walk-in wardrobe, upgrade the kitchen or add a nice outdoor area. Those jobs might get done one day or you could find a property that already has them and enjoy the upgrade the second you get the keys. A fixer-upper or building project might seem nice and romantic but the reality of half-painted walls and weeks without a bathroom is hardly glamorous - especially when the finished article might only be a well-placed offer away.

4. Your income has changed

Starting a new job, or receiving a significant pay rise, are big factors when making the decision to buy a bigger home. Having the budget to upsize is paramount and, if you’re upsizing, it’s likely that you’ll be able to use the equity from your home to make the move. 

While your down payment will probably be reasonably high, your existing homes sale price will also be higher, and you may not be getting a much bigger mortgage than you currently have in the end. Have a meeting with your lender to get a pre-approval or at the very least a green light on moving forward.

Likewise, your circumstances might be changing and your income could be reduced. There’s a lot of uncertainty around at the moment and a reduction in hours or the threat of redundancy may have a lot of people reviewing their circumstances and assessing whether their current mortgage is worth the stress. Downsizing could reduce mortgage payments in two ways.

Equity Release

This unlocks the increase in your home’s value from when you bought it to what it’s worth now. Say you bought a property for $500,000 two or three years ago, that’s not the price it’s worth in today’s market. It could now be worth $580,000 or more depending on your registered valuation and the actual price you receive due to market demand (a bidding war may increase it beyond its market value).

Interest Rate Decrease

When you bought your house two or three years ago interest rates were a lot higher. If you fixed your mortgage for three years at 6%+ then your interest payments could be almost double what you might achieve today. Using a free online mortgage calculator, if you’re looking at a $500,000 mortgage at 6% over 30 years that means you’ll pay the bank a total of $1,078,674 (principal loan plus interest). Compare that to the same loan amount over the same term but at a 3% interest rate and you’ll be paying the bank only $758,573.

The weekly repayments on the first loan structure are around $691 while the second shows weekly payments of only $486 meaning a switch from a high-interest rate loan to a lower interest rate structure could save the person paying this fictional mortgage $205 a week over 30 years.

5. Get an idea of how much your home will sell for

It’s helpful to have an idea of the current market value of your home before you start planning to sell and luckily there are a wealth of online tools to help you do this. 

You can get an idea of the value of your home by looking at online platforms such as qv.co.nz and trademe.co.nz as they offer detailed information on properties such as their rateable value and previous sale price but your bank can also do an internal house valuation. 

However, even though these online websites give you a good indication, it is important to remember that the online valuations can’t give you the insights a trained and experienced agent or salesperson can. The software used is highly developed but isn’t quite the same as someone on the ground, in your region, selling houses day in day out. So if you’re ready to take the step you can request a free professional assessment today.

If you are still in the decision-making phase of assessing your financial position, now is a good time to gather up your financial documents like tax returns, pay slips, bank statements, and have an organised folder ready for the mortgage approval process. You’ll be far more prepared and ready when it comes time to mortgage your dream home.

Even though the idea of moving isn’t always easy, it’s worthwhile when your new home in your new neighbourhood enables you to enjoy a new and rewarding lifestyle that you have been looking for. If you’re interested in getting a free no-obligation appraisal done on your current home to see how much buying power you have for your dream home upgrade, we can help. Contact us today by clicking on the link below.

Free property appraisal with our real estate agents


Topics: Selling a house

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