Buying your second home? What you need to know

There’s a lot of tips and advice out there for those buying their first home, but what about those who are moving onto their second, or maybe even third property?

Second home buyers may be more seasoned than their first home buying counterparts, but there is just as much, if not more, to consider when purchasing a subsequent property.

How much equity do you have?

Before moving onto to property number two, it’s well worth figuring out how much value exists in your current home. This information will be useful in helping you figure out what you have to spend on your next property.

To get a good idea of your current property’s value you can take a look online to see what similar properties in the same area have recently sold for. Look for properties that have the same number of bedrooms and bathrooms, as well as the same land size and general condition.

You can then work out the equity you have by essentially taking away the amount you still owe on your mortgage from the estimated value of your home.

Research your options

If you have saved up a decent amount of equity in your home you may be able to use this as leverage for your second home.

You may be looking at buying an investment property, or perhaps you’re looking to sell up your first home so you can use the funds left over for your next property.

It is worth having a chat to a lender or a mortgage broker about the amount of funds you have available to you and how they can be used towards purchasing another property.

They may be able to provide you with tips on how to boost your borrowing power, perhaps through doing things like cancelling credit cards or adding value to your existing property.

Will your finances cope?

Paying off two properties, or upgrading to a bigger home, can put a lot of pressure on your finances, so you’ll need to consider your cash flow and how you will be able to afford the extra expense.

Calculate all of your month-to-month costs and give yourself some wiggle room before deciding to purchase a second property.

It’s always helpful to have a financial buffer available to protect you in case your situation changes in the future. Or in the case of purchasing an investment property, if you find you can’t rent it out for a particular period (and aren’t receiving the rental income you might have based your calculations on).

A second property can set you up financially in the long term, but you need to ensure it doesn’t put you under undue financial stress in the short term. Take your time doing some research and due diligence and try to restrain yourself from biting off more than you can chew.

If you’re looking for help or information about purchasing your second property in Werribee or surrounds, contact Professionals Triwest Real Estate.

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