Working out where you really stand

Assess your current financial health and property value before committing to a move.

Assessing your current equity position

Before you engage an estate agent or visit an open house, you must understand your current financial standing. This starts with an accurate valuation of your existing property and a clear statement from your lender regarding your remaining mortgage balance. The difference between these two figures is your gross equity. However, you must account for the costs of selling, including agent commissions, marketing fees, and legal costs. In Victoria, these costs typically represent a significant portion of your sale price. Knowing your net equity provides the foundation for your next purchase budget and determines how much you need to borrow for the upgrade.

Understanding your borrowing capacity is the second pillar of your preparation. Lending criteria often change, and what was possible when you purchased your first home might not apply today. Lenders will scrutinise your income, existing debts, and household expenses under current interest rate environments. It is beneficial to obtain a pre-approval from your bank or broker early in the process. This gives you a realistic ceiling for your search and allows you to act quickly when the right property appears. Always ensure your budget accounts for the rising cost of living and potential future interest rate adjustments to maintain your lifestyle after the move.

Analysing local market conditions

The Victorian property market is not a single entity but a collection of micro-markets that perform differently. You might be selling in a cooling suburb while looking to buy in a high-demand area. Research recent comparable sales in both your current location and your target suburbs. Look at median house prices, days on market, and clearance rates provided by Consumer Affairs Victoria. This data helps you manage your expectations regarding how long it might take to sell and how much competition you will face as a buyer. Being well-informed prevents you from overestimating your sale price or underestimating the cost of your next home.

• Obtain three independent appraisals for your current home
• Request a payout figure for your existing mortgage
• Review your last twelve months of living expenses
• Check your credit score via an official reporting agency
• Consult a mortgage broker about current lending limits

Budgeting for the hidden costs of moving

Moving home involves more than just the purchase price and the deposit. Victorian buyers must account for land transfer duty, which is a significant upfront cost calculated on the property value. Use the calculators provided by the State Revenue Office Victoria to estimate this amount accurately. Other costs include building and pest inspections, conveyancing fees, moving company charges, and potential repairs to your current home to make it market-ready. If you are buying a larger home, consider the increase in council rates, utility bills, and maintenance costs. Factoring these into your initial plan ensures you do not face a cash flow crisis during the transition.

Preparation also involves psychological readiness. Selling and buying simultaneously is stressful and requires significant time for inspections and meetings. Ensure your work and family commitments allow for this intensity over a three to six month period. Discuss your plans with all household members to ensure everyone is aligned on the goals and the potential compromises required. A unified approach reduces friction when difficult decisions need to be made quickly. Having a clear vision of why you are moving will keep you motivated when the process becomes challenging or if your first few offers are not successful.

Finally, consider the timing of your move in relation to the broader economic cycle. While no one can perfectly predict market peaks or troughs, understanding general trends can influence your strategy. For example, in a buyer market, you might prioritise selling first to ensure you have funds available. In a seller market, you might focus on securing a property first, confident that your current home will sell quickly. Consult historical data and expert commentary to form a balanced view. Your goal is to make a move that is sustainable for your long term financial health rather than chasing short term market fluctuations.