Autumn is traditionally a busy time for property sales in New Zealand. The weather is more settled, homes tend to look their best, and open homes are usually well-attended. But getting ready to sell isn’t just about decluttering, staging or listing. It’s also important to get your finances in order. If you’re getting ready to sell your home this autumn, here are five ways to get financially ready before you list.
1. Work out your equity
Equity is the difference between your home’s value and what you still owe on your mortgage. It’s important to know your equity because this is your deposit for your next property.
Knowing your equity helps you understand how much you could borrow for your next home and sets your budget before you start house hunting.
To work out your equity:
- Request an up-to-date mortgage balance from your lender
- Get a realistic appraisal from a local real estate agent
- Speak to a mortgage adviser to calculate how much of your equity you can access
2. Budget for selling costs
Selling a property comes with a number of costs that can eat into the proceeds of your sale if you’re not prepared. These extra costs affect how much you’ll walk away with at the end of the sale and how much deposit you can put towards your next purchase.
To work out your selling costs:
- Calculate agent commission, marketing fees and legal costs
- Allow for staging and any repairs or maintenance that add value to maximise your sale price
- Include moving costs and any overlap in insurance or utilities as you move from one home to the next
3. Set aside an emergency fund
Property sales don’t always go according to plan. There may be delays, conditional offers, or timing gaps that can leave you out of pocket.
You may need to pay a mortgage on two properties temporarily or cover unexpected costs that come up during the move. Planning for these with an emergency fund ensures you don’t go into debt or struggle financially.
To set aside an emergency fund:
- Aim to save at least three months of essential expenses
- Avoid committing every dollar from the sale proceeds to your next deposit
- Keep some funds in a separate account for short-term cash flow needs
4. Plan your next move
Decide whether you’ll sell or buy first as the order you choose can affect your finances and stress levels! If you’re buying before selling, you may need bridging finance. Selling first could mean moving into a short-term rental until you find your next home.
The timing can also impact your loan structure and repayments so it’s essential you plan your next move carefully.
Before deciding to sell or buy first:
- Talk to a mortgage adviser about your borrowing capacity
- Ask about bridging loan options and how repayments would work
- Get pre-approval from your lender so you can move quickly when you find your next property
5. Review and restructure your loan
Moving home is an ideal time to reassess your overall loan strategy. Many homeowners roll their existing loan straight into their next property without reviewing whether it still fits their circumstances. But that isn’t always the best option.
Reviewing your loan is important, particularly if your income or expenses have changed, interest rates and lending policies have adjusted, or you want to pay off your next loan faster or improve your cash flow.
Make time to:
- Review your current interest rates and loan structure
- Consider whether to refix, split or adjust your loan repayments
- Align your mortgage with your long-term financial goals
If you’re considering selling this year, don’t wait until your home is on the market to talk finance. Get in touch with a Mortgage Express adviser early and get help understanding your equity, borrowing power and loan options, so you can step into your next home without any financial stress.
