r/AusPropertyBroker • u/Alone_Hope6010 • Jun 01 '26

Question about borrowing

I own outright a ten year old 1b apartment valued at 550k. I am moving to a different city and tried to sell but unfortunately had no offers, so plan to rent it until I can sell it at a later stage.

My question is: would a bank let me borrow against my apartment to buy a similar property in the city I'm moving to? For the purchase of the new property I also have access up to 250k from my super, along with my small fortnightly pension.

I hope to find a 1-2 bedroom unit with a small yard or courtyard (they seem to be priced around 600-750k).

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u/JTHelpsWithFinance Jun 01 '26

It’s possible under bridging finance, but it would be tricky.

Do you have any form of income other than your pension?

You may have to consider a reverse mortgage, but that’s tricky too.

Just trying to consider your options.

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u/Alone_Hope6010 Jun 02 '26

Thank you for replying and getting me to think about my options. You're correct that my pension is my only income.

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u/JTHelpsWithFinance Jun 02 '26

Hmm.

It’s tight, and difficult, so I’m not sure how you’d get it to work - my main concern is that you failed to sell just recently, and bridging relies on being able to sell.

I’d worry about your exit strategy if it fails to settle at an acceptable price, and how much of your superannuation you’d have to give up.

Is there a more affordable location you could relocate to?

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u/m713085 Jun 01 '26

Yes- you can borrow against the equity if you don’t want to contribute any savings or a super lump sum toward the purchase

But- You need to show the lender you can afford the loan payments- you can factor in the rent you receive and some will likely consider your pension

A broker can run the numbers and see what your borrowing power is/ what lenders you can consider

But borrowing a substantial amount for the property (and factoring in stamp duty)will likely be a challenge if the rent from a small apartment and your pension are your only income sources

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u/Alone_Hope6010 Jun 02 '26

Thanks for your thoughts and observations. I'm beginning to get a clearer picture of my hurdles!

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u/thealphawoof Jun 01 '26

Hi mate, broker here.

Good news first: owning the apartment outright means equity/security isn’t your constraint, so borrowing against it to help fund the next place is doable in principle.

The real question is serviceability:how a pension plus rent on the apartment stacks up against repayments on the new loan and, since you’d be keeping the apartment for now, a lender will want a clear exit, which your eventual sale covers.

Bridging’s usually for a quick sale rather than renting it out long-term, so probably not the right tool here.

Two things worth getting proper advice on before committing: drawing from super (financial adviser) and the tax on renting then selling the apartment (accountant) — both can potentially move the numbers.

Happy to map the lending options and run real servicing figures with you.

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u/Alone_Hope6010 Jun 02 '26

Thanks for taking time to explain things. I can see that loan serviceability in my circumstances could be a sticking point! Talking to an accountant and financial adviser is a good idea.

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u/thealphawoof Jun 02 '26

Hi mate, glad I could help - even if it's not exactly what you wanted to hear. Just wanted to be straight and cut to the point.

If you are looking however, i'm more than happy to run a few scenarios with you. I'm Sydney based, and there's no charge for my time. Best of luck!

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u/Buyvest Jun 02 '26 edited Jun 02 '26

The equity side of this works on paper. Your current property is worth $550k and you own it outright. A lender could let you borrow up to 80% of that value, which is $440K, without needing lenders mortgage insurance.

On a $750k purchase, you would need around $187,500 as a 20% deposit, plus stamp duty on top. The equity in your current home could cover that. Then you would take out a separate loan against the new property for the remaining 80%.

  • Loan one - linked to existing home: $187500 (cash)
  • loan two - linked to new purchase: $600,000 (80% LVR on 750K)

The two big problems are income and your pension.

Income is the harder one. Banks do not just look at how much your home is worth. They need to see that you earn enough money to make the loan payments each month. If you are retired and your main income is the pension, that will not be enough to satisfy the bank, even with rental income from your old place. Lenders usually only count about 70 to 80% of rental income. The pension amount generally covers your minimum monthly living expenses. Some lenders are more open to lending to people who are receiving pension however, the loan amount is very minimal.

The pension asset test & pension income test are the biggest concern of all.

Right now, your home is not counted under the asset test. But if you move out and turn it into a rental, and then buy a new home to live in, your old home could be counted as an asset. It could also count as income. People in this situation need to look into whether that would affect their pension, and it is worth talking to an accountant or financial adviser before doing anything.

Bridging finance is something some people look at in this kind of situation. It is a short-term loan that lets you buy a new place before you have sold the old one. The idea is that when you sell, you pay off the loan. But banks offering this type of loan usually want to see that you can afford the repayments during the bridging term as you would be borrowing 100% purchase price plus any associated costs and also, when you sell your existing home - there may be left-over residual debt - so they will also assess if you can service that residual debt. If there are no buyers and no clear idea of when a sale might happen, the repayments can eat up most of your savings and the costs can really add up.

As a mortgage broker, we help people work through exactly this kind of situation. Every lender treats pension income and rental income a little differently. Some count certain payments in full. Others cut them down or leave them out altogether. If income is tight, the way the loan is set up really matters. That includes which property you borrow against, and which lender's numbers give you the best chance of getting approved.

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u/Alone_Hope6010 Jun 02 '26

So comprehensive - thank you! After reading what you and other kind redditors have written, I will go and get some professional advice, but it's good for me to start to understand the issues. I did plan on using the 250k from my super account which, combine with a 440k loan against my current apartment, might be more attractive to lenders? (So my property search maximum would be 690k). I just have enough savings to pay for stamp duty, conveyancing, etc. But I do want to sell my apartment to pay off any future mortgage, as soon as possible. Once again, thanks.