Sell or rent out your home | Buying your next home - NAB
Sell vs. rent: at a glance
Selling your home before you buy may suit you if:
- You want a bigger deposit for your next purchase
- You prefer simpler finances with one mortgage
- You do not want landlord responsibilities
Renting out your home may suit you if:
- You want to keep the property as an investment
- You can manage two mortgages
- You want flexibility if the market is not ideal for selling
How selling or renting affects buying your next home
Your choice can shape what you can afford next.
- Selling first may increase your deposit and reduce how much you need to borrow.
- Renting out means lenders assess both mortgages and your expected rental income.
- Rental income is usually not counted in full, which can affect borrowing power.
- This may influence your price range, timing, or loan structure when buying your next home.
Option 1: Selling your home to buy again
Selling your current home is often the most straightforward option when upgrading. It allows you to reset your finances before moving on to your next purchase.
Pros of selling
- Unlock equity for a bigger deposit: Selling can free up value you have built in your home, after costs, which may help reduce how much you need to borrow next.
- Simpler finances: You usually move from one home loan to another, rather than managing two loans at the same time.
- No landlord responsibilities: You avoid managing tenants, maintenance, or rental compliance.
Cons of selling
Miss out on potential future growth: If property prices rise after you sell, you no longer benefit from that growth.
Selling costs apply: These can include agent fees, marketing, and legal costs.
Timing matters: If the market is softer when you sell, your home may take longer to sell or achieve a lower price.
Option 2: Renting out your home and buying another
Renting out your current home means turning it into an investment property while purchasing your next place to live.
Pros of renting out
Rental income can help: Rent may help cover part of your new mortgage, although it may not cover all costs.
Exposure to future growth: You keep ownership of both properties, which may support long-term wealth building.
Flexibility: Renting can be a short or long-term option if selling does not feel right now.
Cons of renting out
Two mortgages to manage: This can increase financial pressure if income changes or costs rise.
Vacancy and maintenance risks: The property may not always have a tenant, and repairs are your responsibility.
Ongoing landlord obligations: Even with a property manager, you remain responsible for the property.
Key financial things to think about
Before deciding whether to rent or sell, it helps to pressure-test your finances.
- Can you afford two mortgages if rent drops or stops?
- Do you have enough equity to buy again without selling?
- How comfortable are you managing higher repayments if rates change?
Tax considerations
Renting out or selling a property can affect your tax situation in different ways. Outcomes depend on individual circumstances, and rules can change over time. Understanding that tax may be impacted is an important part of deciding whether to sell or rent out your home.
Get help deciding your next move
Choosing between renting out vs selling your home can feel complex, especially when you are also planning to buy your next place. A home loan specialist can help you understand:
- How each option affects your borrowing power
- What your deposit options may look like
- Your possible next steps based on your situation
Speak to a home loan expert
Book an appointment to speak with one of our experts via phone, video or face-to-face.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.