There comes a time for every homeowner to face life-changing situations for several reasons such as addressing current living conditions and needs of a growing family, finding additional income streams, selling or acquire bigger property, or whether to upsize their current home.

With all these possible scenarios in place, deciding which one to choose may not be as easy as one might think and could require time to weigh their options such as being tied to obligatory financial commitments to upsize and other factors that could add more stress and pressure to homeowners.

Before considering to upsize, try to ask yourself these questions to determine whether it is feasible or not.

Determine your reasons for upsizing

Upgrading your home could be a short-term goal of addressing an immediate need such as adding more space or more space to add rental income. But how about the long-term?

For instance, what are your plans for your upsized property in the next 5 to 10 years, when your kids have moved out and started their own families and homes? Will you sell your property and find a smaller and more manageable property to live in?

Oftentimes immediate solutions need a bit more thought, especially when you plan to upgrade to take advantage of investment opportunities.

What are your goals for investing? Will the investment be a worthwhile idea and give you a significant amount of time to recoup your costs and get the returns on your investments?

It is vital to consider all possible outcomes should you decide to upsize and how you see yourself in 10, to 20 years down the road. Planning carefully and working out your strategies can help you minimise the risks, as well as help you prepare for any outcome.

Home loan options and debt-servicing

Lending guidelines have become more complex over the years and made it a bit more difficult to secure loans compared to a decade ago.

There’s more to upgrading your home than simply taking money from your savings and enable more options to seek out a loan for your upsizing project.

How much do you plan to borrow? Do you have enough equity to support your loan application? Is your disposable income enough to cover repayments?

When applying for a loan make sure you are aware of the guidelines and fine print so you can be guided accordingly when making your decision.

Reviewing and evaluating your financial standing is critical, so consult a financial advisor to help you determine and assess your financial capabilities before taking the step to upsize your property.

Incidental costs and other obligations 

Bigger property means bigger costs and expenses. Your loan and mortgage payments will definitely increase once your upsize loan is approved, including stamp duties and mortgage insurance.

Additional costs would entail basic utilities, taxes and duties, insurance, maintenance, and other incidentals, aside from incurred costs in hiring contractors or removalists.

Bigger property, bigger budget

Is your present income enough to cover your budget for a bigger property? It goes without saying that the bigger the size of your property, the bigger a budget is required to cover for costs and expenses that go with it.

It is essential that regular maintenance costs need to be factored in, such as costs for repairs, landscaping, swimming pool clean-up, etc.

Always remember to plan carefully and weigh your options before you decide to upgrade your property. There’s more to upfront costs that you are sure to expect you will be dealing with such as additional responsibilities and obligations that go along with it.