Lately, there’s been a lot of talk about downsizing – moving into a smaller home as you grow older. However, if you’re only just starting to see your family grow, the opposite – upsizing – is much more relevant. As your assets, family and needs increase, you might just find you’ve outgrown your home and need more space for your day-to-day living. Upsizing isn’t as simple as it sounds though – from increasing your mortgage to maintaining a larger property, there are many factors to be taken into consideration before you upgrade.
Moving into a new, larger home has some undeniable benefits. Having more space allows you to give your children the space to grow both physically and socially (e.g. having friends over). It can also impact our own social lives as adults, as we might have more capability to host guests and, if so inclined, spare rooms could be rented out using Airbnb.
A larger home can also give you working space for personal projects or developing your own business before you have the startup capital to acquire a commercial space.
Upsizing can also have tangible financial benefits in the future. In a positive property market, your home’s value may appreciate over time, leading to considerable revenue when you go to sell. The windfall from this sale can help to free you from your mortgage later in life and, if the right conditions are met, allow you to contribute up to $300,000 to your superannuation.
That said, there are plenty of costs that need to be taken seriously. Of course, it’s possible you’ll be spending more on your mortgage with a higher value home, but remember to think about other costs such as:
So, is upsizing the best idea? Could renovation be a better option?
If upsizing is ultimately in line with your goals – be those financial, familial or business-related, it could be a risk worth taking. It’s important to develop a comprehensive financial plan that takes into account your objectives.
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