Purchasing a larger home for a growing family means you need enough borrowing capacity to cover both the property price and the costs of moving up.
Most families upsizing in Queensland find themselves in one of two positions: they have equity in their current home that can be used as part of the deposit, or they need to sell first before they can purchase. The approach you take depends on how much you owe, what the property is worth now, and whether you can service two loans temporarily if you buy before selling.
Using Equity From Your Current Home
You can access equity in your current property without selling it first if your loan to value ratio allows. Lenders typically permit borrowing up to 80% of your property's current value without requiring Lenders Mortgage Insurance. If you owe less than this, the difference can be used toward your deposit on the larger home.
Consider a family who purchased in Brisbane's northern suburbs several years ago. Their property has increased in value, and they now owe $320,000 on a home worth $550,000. At 80% LVR, they could borrow up to $440,000, which means they have access to $120,000 in usable equity. After holding back funds for selling costs later, they can apply this toward the deposit on their next property while keeping the first home temporarily or converting it to an investment.
This approach requires you to service both loans until the first property sells or becomes tenanted. Your borrowing capacity will be assessed based on your income, existing debts, and the repayments on both properties.
Structuring a Home Loan for an Upsize Purchase
The loan structure you choose should reflect whether you plan to sell your current home, rent it out, or hold it temporarily during the transition. A variable rate home loan offers flexibility if your situation might change within the first year or two. A split loan, combining fixed and variable portions, can provide rate certainty on part of the debt while keeping access to offset accounts and allowing extra repayments on the variable portion.
If you are buying in a suburb where property values are rising and you expect to build equity quickly, a loan with an offset account lets you park savings and reduce interest without locking funds away. Offset accounts are linked to the variable portion of your loan and reduce the balance on which interest is calculated, which can be useful during the transition period when you may have irregular cash flow from selling your previous home.
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Selling First or Buying First
Whether you sell your current home before purchasing the next one depends on your equity position, your income, and how quickly you need to move. Selling first gives you certainty around your deposit size and removes the risk of holding two properties, but it often means temporary rental accommodation or timing settlement dates carefully.
Buying first avoids the disruption of moving twice and gives you time to prepare your current home for sale without the pressure of a settlement deadline. You will need enough income to service both loans during the overlap, and lenders will assess this as part of your home loan application. Some lenders offer bridging finance to cover the gap, though this typically comes with higher interest rates and shorter terms.
Families upsizing in regional Queensland areas may find it easier to sell first due to longer settlement periods and less competition, while those in metro areas like Brisbane or the Gold Coast may prefer the certainty of securing the new property before listing.
How Lenders Assess Borrowing Capacity for Upsizing
Lenders calculate how much you can borrow based on your income, living expenses, and existing debts. When you are upsizing, they will include the repayments on your current home loan in that calculation unless you can prove the property will be sold before settlement or will generate rental income.
If you are keeping your current property as an investment, lenders typically assess rental income at 80% of the market rent to account for vacancies and management costs. Your home loan pre-approval amount will reflect this adjusted income, which may reduce how much you can borrow compared to a scenario where the first property is sold outright.
Your loan to value ratio also affects the interest rate you are offered. Borrowing above 80% of the property value usually requires Lenders Mortgage Insurance, which protects the lender if you default but adds to your upfront costs. Keeping your LVR at or below 80% can also unlock better interest rate discounts from lenders.
Choosing Between Fixed Rate and Variable Rate Loans
A fixed interest rate home loan locks in your repayments for a set period, which can help with budgeting during the transition to a larger home. A variable interest rate allows you to make extra repayments, access offset accounts, and benefit from rate cuts if they occur.
Many families upsizing choose a split loan, fixing a portion of the debt to manage repayment certainty while keeping the remainder variable for flexibility. This approach works particularly well when you expect a lump sum from the sale of your previous home, as you can direct those funds into the offset account or pay down the variable portion without penalty.
If you are purchasing a larger home in a suburb where land values are increasing, building equity quickly through extra repayments on the variable portion can improve your position for future refinancing or further property purchases.
What Costs to Include Beyond the Deposit
Purchasing a larger home involves more than just the deposit. Stamp duty in Queensland is calculated on a sliding scale and increases with the property price, so moving from a $500,000 home to a $700,000 home will result in a higher stamp duty bill. You will also need to budget for conveyancing, building and pest inspections, loan application fees, and removalist costs.
If you are buying before selling, you will need to cover the holding costs on both properties until the sale settles. These include rates, insurance, and loan repayments. If your new home requires immediate work such as painting, flooring, or fencing, factor these into your budget rather than adding them to your home loan amount later, which can push your LVR higher than intended.
Call one of our team or book an appointment at a time that works for you to discuss how your current equity and income can support your move to a larger home.
Frequently Asked Questions
Can I use the equity in my current home as a deposit for a larger property?
Yes, if you owe less than 80% of your current property's value, you can access the difference as usable equity for your next deposit. Your lender will assess whether you can service both loans temporarily or if the first property will be sold or rented.
Should I sell my current home before buying the next one?
It depends on your borrowing capacity and how much equity you have. Selling first provides certainty but may require temporary accommodation, while buying first avoids moving twice but requires you to service both loans during the overlap.
What is the benefit of a split loan when upsizing?
A split loan combines a fixed portion for repayment certainty with a variable portion that allows extra repayments and offset account access. This suits families expecting a lump sum from selling their previous home or wanting flexibility during the transition.
How do lenders calculate borrowing capacity if I keep my current home as an investment?
Lenders assess rental income at around 80% of market rent to account for vacancies and costs. Your existing loan repayments and this adjusted income will determine how much you can borrow for the new property.
What costs should I budget for beyond the deposit when upsizing?
You will need to cover stamp duty, conveyancing, inspections, loan fees, and removalist costs. If buying before selling, budget for holding costs on both properties including rates, insurance, and loan repayments until the sale settles.
