HOW TO TURN AN UPGRADE INTO A GOOD MOVE

Even in the current market, with interest rates - and bond repayments - set to rise again before the end of the year, there are still homeowners seeking to upgrade to bigger and more expensive properties.

"Families grow, earnings rise and lifestyles change, and any of these factors can bring about a decision to find a new home in a better area or one offering more elbow room," says Dr Piet Botha, chairman of the Nationlink estate agency group.

"And there are those who believe that now is actually an ideal time to upgrade - among them those whose current homes have shown a huge increase in value over the past four years, and who have not spent the additional equity on alterations or a second property, a new car or an expensive holiday.

"When they sell their homes, such owners are quite likely to be able to put down a really large deposit on an upgrade, and as a result might well end up with a smaller home loan - and monthly repayment - than they have currently."

However, even if they are not in such a fortunate position, some owners will need or want to upgrade now to a bigger property or smarter area, says Botha. Before they do, though, they should first consult a mortgage originator to find out what sort of deal they could get on home financing.

"You might qualify for a much bigger bond or much lower interest rate now than when you bought your current home 10 years ago. On the other hand, you need to be realistic about how much more of a mortgage payment you could really afford. Just because a bank approves you for a certain amount, it doesn't automatically mean you should spend that much.
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"You also need to factor in other debts and expenses and long- and short-term savings goals like university for the children and your own retirement - and leave yourself some leeway to cope with future interest rate rises."

Then, he notes, homeowners who are still intent on upgrading need to be very realistic about what they can expect to get for their existing homes. "Buyers are much more educated about property values than they were four years ago and now that prices are not rising so rapidly, over-priced properties stick out like sore thumbs.

"But if you enlist the help of an experienced, knowledgeable agent to set a reasonable asking price and market your home properly, you will be well on the way to a successful sale."