© Copyright 2024 Tella (New Zealand) Limited. All Rights Reserved. Powered by Tella.
24 minute read
Buying Before Selling? Here’s How to Work Out Your Peak Debt
Understand how overlapping loans affect your repayments, borrowing and financial buffer.
Nurain Nadzirah
20 September 2026
Buying a new home before selling your current one is possible, but it means planning for a period where you may have two properties and two home loans at once.
That’s where peak debt comes in.
What is Peak Debt?
Peak debt is the highest total amount of debt you could carry while your current and new homes overlap.
This can happen when bridging finance is used to help you buy your next home before the sale of your current property settles.
For example, if you have $500,000 left on your current mortgage and need $900,000 of new lending for your next home, your total debt could temporarily reach $1.4 million.
That’s your peak debt.
It’s not necessarily the amount you’ll owe long term. Once your current home sells, the sale proceeds can be used to reduce the debt.
The important thing is knowing: - How high your debt could go during the transition - And whether you can comfortably carry it.
4 Things to Check before Taking on Peak Debt
1. Your maximum lending
Start with your existing home loan and the lending needed for your next property. Current loan + new lending = potential peak debt
This gives you a clearer idea of the highest level your total debt could reach.
2. Your peak repayments
The debt figure is only part of the picture. What will your actual repayments look like while you’re carrying both properties?
Make sure the higher repayments fit comfortably within your household budget.
3. Your buffer if the sale takes longer
Your plan might assume your current home sells within a certain timeframe. But what if it takes longer?
Work out how long you could comfortably carry your peak debt if the sale is delayed.
Not sure how long you could comfortably carry your peak debt?
Let’s look at what your repayments could be while you’re carrying both homes.
4. Your debt after the sale
Peak debt is temporary. Once your current property sells, the proceeds should change your lending position.
Before buying, understand: What will my debt look like after the sale?
This helps you look beyond the short-term overlap and see what your long-term mortgage position could actually be.
The takeaway
Peak debt isn't necessarily a reason to wait.
It’s a number that helps you understand what the move could look like at its most expensive point.
Know your peak debt, your repayments and your buffer before you start house hunting. That way, you’re not just asking what you can buy—you know what you can comfortably carry.
This article is for informational purposes only. It does not consider your personal financial situation or objectives. Please consult with Tella mortgage and financial experts before making any decisions regarding your mortgage or debt strategy.
Category:Newsletters
Category:
Newsletters