Thinking of upsizing your home and moving to a bigger house?
It’s a big step logistically and financially, which makes it critical you take everything into consideration before you upgrade or upsize. Our article will present you with all the key things you should factor into your decision-making process, so you make the right choice for your circumstances.
Let’s start with defining what upsizing actually means, before we go into the pros, cons, and key factors you need to weigh up before making the move.
Upsizing your home is when you move into a new, larger property. You may have outgrown your current home and need to find a family home, typically if your family is growing and you are having a child, or more children. You could also have an elderly parent who needs to move in with you to be cared for.
Moving into a new, larger property is called upsizing your home.
Since the pandemic, people have started looking into buying a bigger home so that they can create a more functional and comfortable lifestyle and/or home office space. It’s a trend that has helped make Australian houses the biggest houses in the world, according to a CommSec Home Size Trends report that tracks house and unit sizes over time. This records the average new Aussie house built in 2019/20 at 235.8 square metres, a rise of +2.9 per cent on the year.
Units are also getting built larger, with the average size of a new apartment now at 136.8 square metres, up +6 per cent on the previous year. This makes our new homes bigger than US houses, which cover an average of 233.1 square metres. The report identifies COVID-19 having played, “a big role, with more time spent at home for both leisure and work, while others are coming to the belief that the layout of their home needs changing.”
But you need to be clear if buying a bigger house is a good investment choice, as we’ll explore in the next section.
There are a number of ‘ifs’ when it comes to answering the question, “Is buying a bigger house a good investment?”
Overall, the local property market has produced solid returns over the medium to long term, so your home’s value is likely to appreciate over time. This could result in a tidy windfall for you when it comes time to sell, which could give you financial security come retirement.
Your home's value is likely to appreciate over time, so you may be able to make a good windfall when you sell your bigger home.
However, this is far from certain. Like any investment, property offers no guarantees and markets do go up and down. But you can ensure you increase your chances of achieving a solid return by carefully researching the market and knowing what you can afford before you buy a new, bigger home.
You may also be weighing up if you should buy a bigger house or pay off your mortgage. There is actually no right answer here, as it depends on your financial circumstances, age, and risk appetite.
If you decide to focus on paying off your mortgage, you will be debt-free sooner and have equity in your property. You can pay off your home loan sooner by being disciplined about your spending and putting more toward your monthly repayments. You will then be free to invest in a bigger house.
Whether you should buy a bigger house or pay off your mortgage will depend on your financial circumstances, age, and risk appetite.
If you opt to purchase a bigger home, you will be taking on more debt, but it is very likely to be a wealth-creating asset. If property values rise, you will also be benefiting from capital growth—the increase in value of your asset over time.
If you are in a financial position to do so, you could also keep your current property as an investment, provided you can afford to do this. Another consideration to think about is that while upsizing into a bigger property type often comes along with a bigger mortgage, you may be able to forego or lessen strata fees if you move into a townhouse or house.
Pro tip: If you are unsure what is the best decision for you, a financial advisor or qualified mortgage broker can help give you informed advice.
There are two main ways you can upsize your home:
But what things should you be aware of before you decide to upsize?
The first thing to do is research the cost implications of upsizing and buying a bigger home. There are many hidden costs that may impact your decision. Some upfront costs of buying a new home you should think about include:
A larger property also implies larger mortgage repayments, more expensive insurance, and higher monthly utility bills—all of which adds up.
In terms of timing, you also need to know when to buy a bigger house.
You may be wondering, is buying a bigger house worth it? A range of factors or events could be a sign to consider buying a bigger property, including if:
If you decide to upsize, then you need to do it right. Follow our tips below to increase the chances of a successful outcome.
To ensure your big move goes smoothly, it makes sense to have a strategy to guide you. The following tips can help this process and give your project some structure:
You should now have a clearer picture of what moving to a bigger house involves and what you need to take into consideration. Ultimately, any decision you make should be guided by your personal circumstances, stage of life, and long term financial goals.
As we mentioned before, a financial adviser can help you to assess your current financial position to provide you with the expert guidance you need to make an informed decision.
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Disclaimer: Doorsteps Finance Pty Ltd ACN 648 541 879 (credit representative no.531036) is authorised under Doorsteps Solutions Pty Ltd ACN 654 334 246, Australian Credit Licence 537369. Doorsteps Solutions Pty Ltd ABN 60 654 334 246 and Doorsteps Finance Pty Ltd ABN 27 648 541 879 are not making any suggestion or recommendation about any particular product or service. The information provided constitutes information which is general in nature and has not taken into account any of your personal objectives, financial situation, or needs.