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Moving house
Selling one home and buying the next is two deals that have to line up. Get the order, the dates and the loan right, and most of the stress goes away.
By Yatin Kainth, Financial Adviser FSP1007497. Last reviewed
Short answer
When changing homes in NZ, your equity from the sale becomes the deposit on the next one. You can sell first, buy first with bridging finance, or line up both settlement dates. Your existing loan can often move to the new home (called substitution of security), which can avoid break fees on fixed rates. Get pre-approval before you list.
Put in rough numbers to see the loan you’d need and where it sits against the 80% limit banks use for owner-occupiers.
Equity after selling
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New loan needed
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New loan-to-value ratio
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What that means
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Ignores bridging costs and assumes your sale settles first. Lenders also check you can afford the new loan on your income.
| Sell first | Buy first | |
|---|---|---|
| Budget | Known to the dollar | Based on an expected sale price |
| Risk | You may need to rent or store furniture between homes | Two homes and two loans if the sale is slow |
| Finance needed | Standard home loan | Bridging finance or an offer subject to sale |
| Best in | A slow or falling market | A fast market where good homes don't wait |
A middle path is to agree a long settlement on the purchase and a short one on your sale, so the two dates meet. Your lawyer and I can work through the dates with you before you sign anything.
Often, yes. Most banks let you keep your existing loan and fixed rates and swap the security from the old home to the new one. This is called substitution of security. It means no break fee and no new application for the existing loan, though the bank still approves any extra borrowing on the usual terms.
If your old loan is with a bank that won't lend on the new home, or the timing doesn't work, you may need to repay it. If the rate is fixed, that can mean a break fee. See how mortgage break fees work.
Not always. Many banks let you move your existing loan and fixed rates to the new property and top up the difference. If you change banks, you'll need a new loan.
Only if you repay a fixed-rate loan early. Moving the loan to the new home usually avoids it. Ask your bank for a break fee quote before you list.
Your equity from the sale counts as your deposit. With 20% or more of the new price, most banks lend without a low equity margin.
Yes. It tells you what you can buy before you commit to selling, and it's needed if you plan to buy at auction.
Let's work out the numbers and the order before you list.
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