In Queensland, many homeowners are sitting on a valuable resource: equity in their homes. Since the COVID-19 pandemic, property values have increased dramatically. With the added excitement around the 2032 Brisbane Olympics, it's more important than ever to think about how to use that equity to buy your forever home. This post will walk you through using your current home’s equity, your options, and how bridging finance can support your journey if affordability is a concern.

Understanding Home Equity

Home equity is simply the difference between what your home is worth and what you owe on it. For example, if your home is valued at $600,000 and your remaining mortgage is $400,000, then your equity stands at $200,000. This equity can be a powerful asset when looking to purchase a new home.

In Queensland, property values have risen significantly over the past few years. For instance, in Brisbane alone, house prices increased by approximately 27% from 2020 to 2022. Many homeowners who bought their houses within this period may have more equity than they realize, making it possible to finance their forever home.

The Impact of the 2032 Brisbane Olympics

The news of Brisbane hosting the 2032 Olympics has created a wave of excitement and potential growth in the property market. Historically, cities that host the Olympics see property values rise by 5% to 15% in the years leading up to the event. This can mean that the equity in your current home could keep increasing in the coming years.

As a homeowner, this moment is a chance to benefit from both the present and future growth of property values. By wisely using your home equity, you can secure a property that aligns with your long-term plans and aspirations.

Options for Your Current Home

When thinking about using your home equity for your new property, you have two main options regarding your current home.

1. Retain Your Current Home

If your current home is in a popular area, it may have the potential for rental income. By keeping it, you can benefit from future property value increases while collecting rent to cover mortgage payments.

However, there are costs to consider, such as property management fees, maintenance, and potential vacancies. It’s a good move if you can manage these responsibilities effectively.

2. Sell Your Current Home

If keeping your current home isn’t an option, selling it can give you a lump sum cash payment to invest in your new home. Selling allows you to lower your overall debt, which makes financial planning easier.

Before selling, analyze current market trends. For example, properties in areas like the Brisbane CBD have seen growth rates exceeding 20% in certain suburbs, making it a potentially advantageous time to sell.

Bridging Finance: A Practical Solution

If your home’s equity isn't enough to buy your next property outright, bridging finance might be a useful option for you.

What is Bridging Finance?

Bridging finance is a short-term loan that helps cover the cost of buying a new property before selling your current one. This means you won’t have to wait for your home to sell before you can purchase your forever home.

This option can be particularly helpful in a fast-moving market. However, remember that bridging finance often comes with higher interest rates and fees than standard mortgages, so it's important to review the terms carefully.

How Does Bridging Finance Work?

Bridging finance typically follows these simple steps:

1. Application: Apply for a bridging loan through a lender by providing information about your current home, the new property you're interested in, and your financial details.

   
   

2. Approval: Upon approval, the lender will provide loan funds based on the equity in your current home and the value of the new property.

   
   

3. Purchase: Use the funds to buy your new home while your current house remains on the market.

   
   

4. Repayment: Once your current home sells, use the proceeds to pay off the bridging loan. If your home does not sell during the loan term, you may need to refinance or find alternative solutions.

   
   

Bridging finance can be a helpful tool, but it’s essential to evaluate your situation and consult with a mortgage broker or financial advisor.

Steps to Leverage Your Home Equity

Understanding home equity and financing options is crucial. Here are actionable steps to leverage your equity for your forever home.

Step 1: Assess Your Current Equity

Start by figuring out how much equity you have in your home. You can get a property appraisal or use online valuation tools.

Once you know your home’s estimated value, subtract your remaining mortgage balance to calculate your equity. This figure gives you a better idea of how much you can use for your new home purchase.

Step 2: Research the Market

Before making decisions, research the property market in your desired area. Look for trends in property values, new developments, and the economic outlook.

Understanding the market helps you make informed decisions about where to buy and how much to invest in your forever home.

Step 3: Consult with Professionals

Working with a mortgage broker or financial advisor can provide insights into your options. They can help clarify your borrowing capacity, the best loan products, and guide you in navigating bridging finance complexities.

Additionally, a local real estate agent can assist you in finding listings that meet your criteria and help negotiate a favorable deal.

Step 4: Make a Plan

With a clear grasp of your equity, market, and options, it’s time to devise a plan. Decide whether you’ll keep your current home or sell it, and outline the steps needed to reach your goals.

Having a strategic plan in hand will help you stay focused as you work toward purchasing your forever home.

Step 5: Take Action

With your plan in place, start taking action. Apply for a loan, list your current home, or begin searching for your new property.

Stay open to opportunities that arise throughout this journey.

Your Path to Homeownership

Using the equity in your current home to buy your forever home in Queensland is an exciting opportunity. With property values rising and the 2032 Brisbane Olympics on the horizon, take the time to understand your options. Whether you decide to retain your current home or sell it, exploring bridging finance can help you make informed choices that contribute to achieving your financial goals.

As you embark on this process, be sure to consult with professionals, delve into the market, and create a robust plan. With the right approach, you can unlock the door to your dream home and enjoy the many benefits it offers.