John comes to the Monash bank seeking lending advice. He is currently living in a three-bedroom house with his wife and two children. The house is too small and he is considering purchasing a five-bedroom house nearby.

He expects to sell his current house for $350,000 and pay $550,000 for the new house. He has cash of 150,000 to contribute to the purchase. He currently owes $200,000 on the mortgage on his current home.

He wishes to buy the new house before he sells his own house to avoid having to find temporary accommodation for his family.

Can this be arranged? If so, what type of loan does he require? What is the amount of that loan, given the expectation provided? What are the major risks for the bank for this type of loan?