If you're planning to sell in Bateau Bay and move up or across to another property, refinancing beforehand might feel like an extra step you don't need. But pulling equity out now or switching to a loan with an offset can give you more options when you're ready to buy again.
There are alternatives to this strategy below though - such as deposit bonds or bridging loans and finance. Both are viable options and should be looked at together with any refinancing strategy and weighed up carefully. The cost of each option varies - none are free - so it's important to have someone on your side who can carefully analyse and lay them out for you.
Deposit bonds typically cost between $1,500-2,500 but it's dependant on the deposit amount you need for the purchase, and how long you need it for.
Refinancing typically costs $700-800 - but there is also a cost to your credit score. Applying for a refinance and then a purchase loan shortly after would be an adverse impact on your credit score - which should be factored in.
Bridging loans can be very useful and provide you with flexibility and comfort - but they can be costly so it's important to check this out before considering.
Another strategy that is rarely discussed with clients is security substitution - if this is possible, it's often the best solution out of all of them, but needs to be carefully planned out.
Whichever strategy is best for you - I will help you plan out not just one but to have a backup option or options, so if it was to fail you've got mitigants there available to utilise to ensure settlement proceeds.
Why refinance if you're just going to sell anyway
Refinancing before you sell lets you access equity without waiting for settlement, which means you can use that cash for a deposit on your next place before your current property has sold. In practice, this might mean you avoid bridging finance or the pressure of selling first in a tight market.
Consider someone in Bateau Bay who bought a unit near The Entrance Road a few years back. The property has gone up in value, and they want to buy a house closer to Bateau Bay Square without rushing the sale of their unit. They refinance and pull out enough equity to cover a 10% deposit on the new place, then sell the unit once they've secured the house. The refinance gave them breathing room and meant they didn't need to rent in between or settle for the first lowball offer.
When releasing equity makes sense for your next purchase
Releasing equity through refinancing works when you have enough equity in your current property to cover a deposit on the next one, and when your income can service both loans temporarily. Lenders will assess your borrowing capacity based on holding both properties for a short period, so you'll need a clear plan to sell the first property within a few months.
The Central Coast property market can move quickly, and having cash in hand from a refinance means you're not a conditional buyer when you find something you like. Sellers take unconditional offers more seriously, and you're not stuck waiting for your own sale to go through before you can commit.
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Switching loan features before you move
If you're not pulling equity out, refinancing to a loan with an offset account can still make sense in the months before you sell. Once your property becomes an investment after you move, having an offset attached means every dollar sitting in that account reduces the interest you're charged, and all the interest on an investment loan is usually tax-deductible.
Say you're moving from Bateau Bay to another suburb but plan to keep your current place as a rental. Refinancing now to add an offset means you're set up correctly before the property changes purpose. You avoid having to refinance again later just to access that feature, and you can start using it immediately once tenants move in.
What happens to your loan when settlement happens
When your Bateau Bay property sells, the proceeds go toward paying out whatever loan balance is attached to it. If you refinanced and pulled equity out beforehand, that means your loan balance is higher, so your net proceeds after settlement will be lower. You need to account for that when you're calculating how much cash you'll actually walk away with.
In our experience, people sometimes forget to factor in the new loan balance when they're budgeting for their next move. If you pulled out $80,000 in equity through a refinance, and your loan balance went from $320,000 to $400,000, your sale proceeds drop by that same $80,000. You've already used that money for your deposit, so it all balances out, but it catches people off guard if they're not expecting it.
Timing your refinance around your sale
You want to refinance early enough that the new loan is settled and the equity is available before you start house hunting, but not so early that you're paying interest on that extra borrowing for months without using it. Most refinances take three to five weeks from application to settlement, so planning around that timeline matters.
If you're unsure whether your property has enough equity or whether your income will support holding both loans briefly, a loan health check before you commit to anything will give you a clear picture. We can run the numbers based on what your place is worth now and what you're likely to borrow next, then work backwards to see if refinancing makes sense or if you're fine to just sell and use those proceeds.
Bateau Bay has a mix of older units and newer townhouses, and equity growth varies depending on what you own and when you bought. If you're sitting on decent equity and the move is happening in the next few months, refinancing early puts you in control of the timeline instead of being at the mercy of how quickly your property sells.
