Upsizing the family home: the bank tells you what you can borrow. Nobody tells you what you should.

The house has started to feel small. The kids need their own rooms, someone needs a study, and weekends are spent scrolling listings. So you do the sensible thing: you ask the bank how much you can borrow.

The bank gives you a number. It is a real number, carefully calculated. It is also the answer to the wrong question.

A bank’s job is to work out the most it can safely lend you. That is a question about the bank’s risk. Your question is different: how much house fits the rest of your life? Your retirement, your kids’ costs, the career change you might want in ten years, the buffer that lets you sleep at night. Nobody in the buying process is paid to ask that. Not the bank, not the mortgage broker, not the agent.

Being good with money doesn’t protect you here. Plenty of organised, sensible households make this decision by default rather than by design, simply because nobody asked them the right questions first.

Here are the six questions worth answering before you talk to the bank.

Six questions to answer before you talk to the bank

1. How much house, without moving your retirement date?

A bigger mortgage rarely feels unaffordable. The repayments fit the budget, so it seems fine. The real cost is quieter: every dollar going to the extra mortgage is a dollar not building the investments that eventually replace your income. Most people never connect the two, because the house decision and the retirement decision are made years apart. They are the same decision.

2. Sell the current home, or keep it as a rental?

For many families, keeping the old house is tempting. Sometimes it is a great move. Sometimes it means a much bigger total debt, most of your wealth in property in one town, and a second job as a landlord. It depends on cash flow, tax, how much time you have, and what else you are trying to achieve. Talk to your accountant about the tax side before you decide. What it should never be is a default.

3. How much deposit, and how much buffer?

Many buyers put every available dollar into the deposit. It feels responsible. But a household with a large mortgage and no accessible cash is fragile: one job change, illness or urgent repair and the only option is expensive debt. Deciding your buffer first, then your deposit, is usually the better order.

4. Sell first, or buy first?

Buy first and you risk carrying two properties, or bridging finance, if the old one sells slowly or for less. Sell first and you risk a rushed purchase or a stretch of renting. Neither is wrong. The right answer depends on how much risk your cash flow can absorb, and you want to know that before you fall in love with a house.

5. Bigger debt, same income risk

A bigger mortgage leans harder on your income. If your income depends on your health, or one income carries most of the household, an injury or long illness matters more after the move than before it. It is worth reviewing your income protection and life cover with a licensed broker before settlement, not after.

6. What else is competing for the same money?

School costs, a car upgrade, helping parents, a sabbatical, a business idea. The bank’s affordability test doesn’t know about any of these. Your plan should. If the new house quietly crowds out a goal that matters to you, you want to see that on paper now, not discover it in five years.

What an extra $300,000 actually costs

An illustrative example. Say a family is choosing between two houses, and the nicer one needs $300,000 more borrowing.

What	Illustrative figure
Monthly repayment on $300k (5.5%, 30 years)	About $1,700
Total interest over the loan	About $313,000
The same $1,700 a month invested for 25 years at 5% after fees	About $1,010,000

That last line is not a fair comparison on its own. The bigger house is an asset too, and it will probably grow in value. But home equity doesn’t pay the grocery bill in retirement unless you sell or downsize. The investments would.

So the real question isn’t whether the bigger house is a bad idea. It might be exactly right. The question is whether you’ve chosen it knowing what it costs, rather than discovering it later.

Figures are illustrative only and rounded. They assume a constant interest rate and a constant 5% return after fees and tax, which real life won’t deliver. Not a forecast, not a recommendation.

A quick self-test

Answer these honestly, with a number where the question asks for one:

1. Do you know what age you could stop working if you bought the bigger house, and how that compares with staying put?
2. Have you decided, with real figures, whether to sell or keep your current home?
3. Do you know how much cash buffer you’ll have the day after settlement?
4. Do you know what happens to your plan if your current home takes six months longer to sell than expected?
5. Would your household still cope if one income stopped for a year?
6. Have you checked which of your other goals the new mortgage pushes back?

If you answered all six confidently, you probably don’t need an adviser. Go and talk to the bank; you’re well prepared. I mean that. Plenty of people handle this well on their own.

If two or three made you pause, that’s normal. These are exactly the questions a good plan answers, and they’re much cheaper to answer before you sign anything than after.

Where to start

If you want to work through it yourself first, the free Life Change Money Checklist walks through the decisions in order.

If you’d rather talk it through, that’s what MoneyPlan is for. I’m a fee-only adviser: I don’t sell mortgages, insurance or investments, and I don’t earn commission on anything you decide. My only job is to help you see the whole picture before you commit. You can see what a plan looks like, or request a free discovery session and we’ll work out whether you need help at all.

The best time to have this conversation is before you talk to the bank. The second best time is now.