Amy and John, 31 and 35 respectively, had been happily living in their two-bedroom apartment since 2019. They had worked hard, stuck to a budget, and over time, chipped away at their mortgage. Meanwhile, their apartment had grown in value, putting them in a great financial position. Now, they were dreaming of more space – a home where they could put down roots for the long term and where they could raise a family. But they weren’t sure how to make it happen.
In the past I had helped Amy and John secure their apartment and we had been chatting every year about their repayments, interest rates and their plans. I was very excited to get the call and hear that they were ready for the next step!
Understanding how equity works
Equity is the portion of your home that you truly own – the difference between your property’s current market value and the amount left on your mortgage. As you pay down your loan and your home appreciates in value, your equity grows.
For Amy and John, their years of careful financial management meant they had built up a good amount of equity. The big question was—how could they use it to buy their next home while holding onto their apartment as an investment?
Exploring their options
When we sat down together, we talked through their finances, future goals, and any changes that might be coming their way. From there, we mapped out a plan that made them feel confident about their next move:
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Using their home equity wisely – By refinancing their mortgage, Amy and John could unlock a portion of their home’s value to use as a deposit for their new house. To avoid Lenders Mortgage Insurance, they had to make sure their total loans did not exceed 80% of the current property value.
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Getting a new home loan – I recommended a loan that kept repayments manageable across both properties and they confirmed that their accountant was happy with the new structure from a tax point of view.
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Turning their apartment into an investment property – Amy and John looked at rental income potential, property management options, and holding costs, tax benefits and potential tax costs to make sure keeping their apartment was a smart financial move.
Making the Move
With a clear plan and a solid home loan conditional approval in place, Amy and John felt empowered to start house hunting. In no time, they found a three-bedroom Victorian house in Sydney’s south west with a gorgeous backyard and only a short drive from a local beach and nearby train station. At the same time, they secured tenants for their apartment, ensuring a steady rental income to support their investment. Their careful planning and smart financial decisions meant they could step into this next stage of their lives with confidence and security.
Lessons from Amy and John’s Journey
- Equity can be a powerful tool for upgrading to a new home without needing to sell your existing one.
- Having a clear financial strategy helps you feel in control of big decisions.
- A good investment strategy can create long-term financial security while giving you the home you want today.
Amy and John’s story is a great reminder that with the right approach, big property dreams can become reality – even in Sydney’s competitive house market!
If Amy and John’s story has inspired you and you’re wondering how to use your home equity to make your next move, let’s chat!
*names changed to preserve confidentiality
