The short answer
Planning to upgrade your family home? Learn what a 20% deposit means for your loan, costs, and savings position.
Upgrading to a bigger family home with a 20% deposit avoids lenders mortgage insurance, but stamp duty and settlement costs come on top. In this example, a $1,065,000 home in Clyde North means an 80% loan of $852,000 and a savings or equity contribution of about $281,000 once stamp duty of roughly $58,575 and about $9,000 in costs are included.
What does a family upgrade look like in numbers?
Here is a worked example for a family of five upgrading to a larger home on Golden Gate Drive, Clyde North, at about $1,065,000. The numbers are approximate and for illustration only.
Item | Amount |
|---|---|
Purchase price | $1,065,000 |
20% deposit | $213,000 |
Stamp duty (VIC, approx.) | ~$58,575 |
Lender, legal and adjustment buffers | ~$9,000 |
Total contribution | ~$281,000 |
Loan amount (80%) | $852,000 |
LMI | Nil |
Where does the deposit come from when upgrading?
Most upgraders fund the deposit from the equity in their current home, savings, or a mix of both. If you are selling first, the sale proceeds after paying out your current loan become your contribution. If you are buying first, you may need a bridging loan or to use equity while you still own both properties.
What are the hidden costs on settlement day?
Stamp duty is the big one, and in Victoria it is about 5.5% of the price at this level. Beyond that, buyers are often surprised by:
Legal and conveyancing fees
Lender application, valuation and settlement fees
Adjustments for council rates, water and owners corporation fees the seller has prepaid
Moving costs and getting the new home set up
We always build a buffer for these into the loan structure and your savings plan.
Should I sell first or buy first?
Sell first and you know exactly what you have to spend, but you may need to rent or move twice. Buy first and you secure the home you want, but you may carry two loans for a while and need bridging finance. The right answer depends on your equity, your local market and how much risk you are comfortable with.
How do lenders assess an upgrade for a family of five?
Lenders look closely at living expenses for larger households, including childcare, school fees and transport. A bigger loan with more dependants means your income needs to cover more. Getting your expenses and documents organised before you start looking makes pre-approval quicker and more accurate.
A typical Melbourne scenario
The Nguyens own a three-bedroom house in Cranbourne worth about $700,000 with $380,000 left on the loan. They want to move to a five-bedroom home in Clyde North for $1,065,000. They sell first, clearing around $300,000 after paying out the loan and selling costs. That covers the $281,000 contribution with a small buffer, and they borrow $852,000 at 80% with no LMI.
Key takeaways
A 20% deposit on an upgrade avoids LMI, but stamp duty adds about 5.5% at this price.
Budget around $9,000 for lender, legal and adjustment costs.
Decide early whether to sell first or buy first.
Larger families have higher assessed expenses, so plan your numbers carefully.
See our first home buyer series for a smaller purchase, use the stamp duty calculator and borrowing power calculator, or talk to our mortgage brokers about home loans and property wealth planning.
General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.
Gav is the person you want in your corner when it comes to property finance. After years in banking and motor trade finance, he joined Elephant early and never looked back. He's passionate about combining property and finance to help clients achieve their goals through tailored financial structuring, and he's very serious about snacks at meetings.
