If you are considering downsizing to free up capital or reduce your mortgage payments, or you just want to free up your time spent on maintenance and cleaning, you need to consider more than an optimal sale price for your family home. Planning the purchase of your next property is just as important if you want to make the most of your options.
Here I outline FIVE factors to improve your purchasing power for your next home.
#1 Organise finance
There are significant benefits to having finance pre-approved before you commence searching for your next property. Firstly, knowing how much the bank will lend you and how much you feel comfortable borrowing is key to your overall financial wellbeing, and stress levels. A second benefit is that pre-approved finance ‘buys you time’, meaning you won’t need to add a lengthy finance clause to a contract. A very short or no financial clause in a contract puts you in a position of strength for negotiating on price and makes you more attractive to a vendor. Engaging an experienced lending specialist is a smart starting point to help you secure pre-approved finance, structured to achieve your lifestyle, wealth creation and overall financial goals.
#2 Seek financial advice
Once you have established how much you can borrow, a financial adviser will consider your overall financial picture – past, present and future – and can help you with the most appropriate strategic and structural advice that aligns to your long-term financial goals. Strategies may include retaining an interest or share-holding in a company or protecting your assets through the establishment of a trust structure to reduce your exposure to risk. A financial adviser will also be able to guide you when it comes to deciding how make the most of any proceeds following your downsize. For example, you may wish to consider taking advantage of the ‘downsizer measure’, legislated since 1 July 2018. Provided you are eligible, this could enable a couple to boost your retirement savings by up to $300,000 each using proceeds from the sale of the family home, and enjoy the tax savings available in the super environment.
#3 Choose a solicitor
Legal advice is a critical part of any purchase and it is wise to connect with a solicitor early. This step is important because when the time is right to make an offer, the contract of sale can be sent to your solicitor to ensure suitable conditions are in place to protect your interests and allow termination of the contract if required. If you are buying off the plan or a strata title, your legal adviser will help ensure the vendor or developer is bound to complete the contract sufficiently or you will be compensated accordingly, for example, your deposit would be refundable in full should the contract fail to complete.
#4 Set your buying criteria
It is worth spending the time upfront to define your ‘wish list’ so that you have clarity about what you actually want to buy: location, size, features and price. You will also need to determine how flexible you are willing to be to achieve an acceptable purchase. Your buying criteria, coupled with knowing how much you can borrow and how much you feel comfortable borrowing, can then be matched with what is achievable using advice from a buyers advocate. In my understanding, setting your buying criteria will give you focus and help you make sound decisions on your buying journey so you are able to achieve the best results.
#5 Engage a buyers advocate
A buyers advocate provides a range of services designed to help you access quality properties matched to your needs, and to purchase or sell at a better price with better terms and conditions. These services include searching for property, bidding at auction, negotiating purchase price and managing other key steps in the purchase process. An experienced buyers advocate will have a good understanding of the current property market(s) in the area(s) in which you hope to buy. Their advice will help you decide what time of year to buy, which market segment offers the best value for money and how much you should expect to pay for the type of property you hope to move to.
Your next step…
To discuss how Resources Unearthed can help you develop a downsizing strategy for achieving optimal outcomes, please contact me on 61 (0)7 3007 2000 or by emailing firstname.lastname@example.org
In case you missed it, in a previous article I outlined THREE ways to optimise the sale of your family home when downsizing.
Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting & business advisory services for executives, professionals and business owners in mining & resources.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.