Upgrading the Family Home – How to Use Refinancing to Buy Before You Sell

Upgrading the Family Home – How to Use Refinancing to Buy Before You Sell

Upgrading your home is exciting — more space, a better location, a lifestyle shift. But the tricky part is timing. Do you sell first? Buy first? Or can you upgrade without moving twice?

Refinancing can unlock equity, boost your borrowing power and give you the flexibility to buy the new place before selling your current home. Here’s how the strategy works.

1️⃣ The Big Question: Can You Buy Before You Sell?

Many homeowners want to secure their next home before listing their current one. The challenge is covering:

• The deposit for the new home.
• Repayments on your existing loan.
• Cash flow during the transition.

Refinancing can help unlock the equity you need to move forwards confidently — without rushing the sale of your current home.

2️⃣ How Refinancing Helps Unlock Your Equity

Your equity is the difference between your property’s current value and your loan balance.
Through refinancing, you can potentially:

• Increase your loan to access a portion of that equity.
• Use the released equity as a deposit for your next home.
• Avoid having to sell immediately or take out personal loans.

This is one of the most powerful reasons homeowners refinance when upgrading.

3️⃣ What Lenders Look For When You Want to Upgrade

When refinancing to buy before selling, lenders assess:

• Your income: Enough to service both loans temporarily.
• Your equity: Usually need enough equity to stay under 80% LVR.
• Your expenses and debts: Including existing mortgage repayments.
• Your borrowing capacity: Can you hold two loans for a short period?

Even if you think you won’t qualify, there are alternative structures (see below) that can make it work.

4️⃣ Option 1: Equity Release Through Refinancing

This is the most common approach. It allows you to:

• Refinance your current home.
• Access usable equity as cash-out.
• Use that cash-out as the deposit for the next property.

This gives you flexibility and buying power before your current home sells.

Related post: Using Home Equity to Borrow

5️⃣ Option 2: Bridging Finance

If holding two loans is too heavy on your borrowing capacity, bridging finance may be an option.

• Short-term loan to cover the gap between buying and selling.
• You only pay interest on the “bridge” portion during the overlap period.
• Once your current home sells, the bridge loan is cleared.

This option works best when:

• You have strong equity.
• Your current home is likely to sell quickly.
• You want to avoid the stress of two full mortgage repayments.

6️⃣ Option 3: Keeping Your Current Home as an Investment

Some homeowners choose to:

• Refinance the current home.
• Release equity for a deposit.
• Buy the new home.
• Rent out the old one as an investment property.

This strategy can build long-term wealth — but requires careful tax and cash-flow planning.

7️⃣ How Much Equity Do You Need?

As a rough guide, upgrading works best when you have:

• 20%+ equity in your current home (avoids LMI).
• Enough capacity to hold both loans briefly or qualify for bridging.

If your equity is slightly below 20%, a broker can still explore options to minimise extra costs.

8️⃣ The Process of Upgrading Through Refinancing

The steps look like this:

• 1. Property valuation to confirm your equity position.
• 2. Borrowing capacity check across multiple lenders.
• 3. Choose your structure (equity release, bridging, or investment hold).
• 4. Refinance your existing loan to access funds.
• 5. Make an offer on the new property with your new borrowing structure.
• 6. Sell (or rent) your current home on your own timeline.

This approach gives you more control and less pressure.

9️⃣ Tips to Make the Upgrade Smoother

A few practical tips:

• Get your valuation done early.
• Prepare 3 months of clean bank statements.
• Set a clear budget for the new home.
• Don’t assume your current bank is the best option.
• Have a backup plan if your property takes longer to sell.

The more prepared you are, the easier your upgrade journey becomes.

🔟 Ready to Upgrade Without the Stress?

A broker can help you:

• Unlock equity for your deposit.
• Compare lenders who support buy-before-you-sell strategies.
• Assess bridging finance options.
• Structure your loans for long-term benefits.