As a plumber with a growing family, you've probably found yourself looking around your current place thinking it's time for something bigger. Maybe the kids are sharing rooms, or you need space for a proper workshop. Whatever's driving the need for more room, upsizing your home is a significant financial decision that requires careful planning.
Understanding Your Borrowing Capacity
Before you start browsing property listings, it's crucial to understand exactly how much you can borrow. Your borrowing capacity depends on several factors:
• Your current income and employment stability
• Existing debts and financial commitments
• Your deposit size and savings history
• The loan to value ratio (LVR) you're comfortable with
As a tradie, your income structure might include a mix of wages, overtime, and potentially some contract work. Lenders will want to see consistent earnings, so having your tax returns and bank statements organised will help streamline the application process.
Exploring Home Loan Options
When you access home loan options from banks and lenders across Australia, you'll encounter various loan structures. The main decision you'll face is between variable home loan rates and fixed interest rate home loan options.
Variable interest rates fluctuate with market conditions, which means your repayments can go up or down. Fixed interest rates lock in your rate for a set period, giving you certainty about your repayments. Many borrowers choose a split loan, combining both options.
Making the Most of Your Home Equity
If you already own property, your home equity can work in your favour when buying a larger home. Home equity is the difference between your property's current value and what you still owe on your mortgage. This equity can help you:
• Reduce the deposit needed for your new home
• Avoid lenders mortgage insurance (LMI) if your LVR is under 80%
• Access better interest rate discounts
• Increase your overall loan amount capacity
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Tradie Home Loans today.
The Application Process Breakdown
Applying for a home loan doesn't have to be overwhelming when you know what to expect. Here's what the typical home loan application involves:
- Getting pre-approved: Home loan pre-approval gives you a clear budget and shows sellers you're serious
- Property hunting: With pre-approval in hand, you can shop within your confirmed price range
- Formal application: Once you've found your dream home, you'll submit your full home loan application
- Property valuation: The lender will assess the property to confirm its value
- Final approval and settlement: If everything checks out, you'll receive final approval and can proceed to settlement
Calculating Home Loan Repayments
When calculating home loan repayments, consider more than just the home loan interest rate. Factor in:
• Principal and interest payments
• Potential interest rate changes if you choose variable rates
• Additional costs like home loan packages fees
• The benefit of features like an offset account
An offset account can significantly reduce the interest you pay over the life of your loan. Your savings sit in this account, offsetting the interest charged on your mortgage balance.
Understanding Additional Costs
Buying a home involves more than just the purchase price. Budget for:
• Stamp duty (varies by state and property value)
• Legal and conveyancing fees
• Building and pest inspections
• Moving costs
• Immediate home improvements or repairs
Stamp duty can be substantial, particularly for larger homes, so factor this into your financial planning early.
Working with Property Market Conditions
The property market can influence your upsizing strategy. In a rising market, your current home's value increases, boosting your equity. However, the property you want to buy will also cost more. In a stable or declining market, you might have less equity but more negotiating power on your new purchase.
Timing can matter, but don't let market speculation override your family's needs. If you need more space and can afford the repayments comfortably, the 'perfect' market timing becomes less critical.
Why Specialist Advice Matters
As a tradie, your financial situation has unique aspects that mainstream lenders might not fully understand. Working with a broker who specialises in the trades industry means you'll get advice tailored to your circumstances. They understand how to present your income in the most favourable light to lenders and can access home loan options that might not be available directly.
Your broker can also help you understand which lenders offer the most attractive interest rate discounts for your situation and guide you through the entire process from application to settlement.
Upgrading to a larger home for your growing family is an exciting milestone. With proper planning, understanding of your options, and the right professional support, you can secure a home loan that fits your budget and gives your family the space they need.
Call one of our team or book an appointment at a time that works for you to discuss your home loan options and get the process started.
