This is something that goes through my head daily and I think DP is sick of me bouncing it off him so I thought I would see what other families situation is like.
Currently we rent off my dad at a very good price for the area I live in.. To rent a similar house in my area is at least $100.00 more.
I have always looked at buying a house as being top priority until I separated from my kids dad and it looked impossible.
Now even though I'm with DP I'm not sure he gets an ok wage and Mine is not great.
I guess what I'm wondering is am I the only one out there who wants to put house buying on hold until I can work completely full time? At the moment even if we rent somewhere else we can afford to have another baby and have a comfortable life. DP is more for renting for a while (5 years plus)
I guess I just want to here other people's experiences.
I can see why DP is sick of me talking about it now haha it makes no sense!
My FIL told us many years ago that it was worth renting and saving as much as we could to go towards a house so we didn't have to get such a huge loan. We rented for 5 years before buying and lived on one wage as DH was at Uni then.
I have always felt it was worth it as we were able to pay the house off earlier and then do an extention.
Use that money you are saving now, even factor in if you rented elsewhere, to go towards a house when you do buy.
I regret buying a house before we had finished having our kids. Having a mortgage has impacted so much on when I have to return to work and the house we bought is now not suitable as we ended up having more kids than we planned.
We have had sooo many discussions about this as my dp has been brought up to believe renting is "dead money" as his parents so forcefully put it. They believe it's worth being broke if you can tell people you own your home. According to them - renting is shameful.
I feel quite differently. We want to enjoy having a bit of extra money to play with for now until we have kiddies. For us, renting will be more affordable until we are both back in full time work. Everyone is different though..
This setup works well for me aswell because dps fam won't visit us while we're renting lol that is ok with me!!
Wow preggo I can't believe they won't visit you because you are renting! How silly! My dad is a big believer of rent money is dead money (its different when my rent is covering his boat which he remortgaged the house for lol)
Rivlas I try and save as much as i can at rhe moment though dp is working on paying of his loans which I would prefer he be debt free.. I have a small loan that I hate but needed a car when my old one died!
Liviam that's another reason I want to wait we only plan one more baby but who knows anything could Happen!
Buying a house involves so many extra expenses - not only maintenance and repairs, but all those hidden extras like government levies, rates, and even the water and sewerage charges. When you're renting, it's someone else's job to take care of all of that.
If you're in a good rental situation, then make the most of it while you can. Try to balance your comfortable lifestyle with an emphasis on putting money away every single fortnight, so that when the time comes and you do feel ready to make the leap, you're in a better position to do so.
LOL! Yeah yeah dead money til he has a benefit. How funny.
I should have mentioned that we are saving into an interest bearing savings account so we are working towards buying but certainly not for many years. I would actually like to buy an investment before buying a home for us. But that's a while away aswell. Dp has just sold a property he bought with his last partner with a really bad loan and so now he's come around to the idea that renting is certainly no more "dead money" than buying can be.
My ex dh had a house/mortgage when I met him.. He put himself into so much bad debt to try and get through it and still had to sell in the end anyway. I think that has scared me a bit.
I think once dp and I have settled in then we will start a locked in savings account.
One of my friends is working her butt off to build her new house that is going to cost her 600 a week in repayments.. That freaks me out as well she has less time with her kids and I would hate that! I feel bad just for working one weekend day a fortnight!
Writing all this down is helping me figure it out lol so sorry if I ramble!
How much will it be in mortgage payments (actual payments, including interest and fees and whatever else)? Council rates? Water rates? Home and contents insurance? Will being a home owner affect any benefits you receive? Will you be spending any extra in gas, electricity, petrol, etc?
Figure out as close as possible how much it will cost you per month, in real terms.
Put aside that amount every month for AT LEAST six months.
That will give you a realistic idea about whether you can maintain payments. And if you can, you'll have a nice little nest egg.
Then figure out how much you will need to spend to buy. Deposit, stamp duty, loan set up costs, mortgage lenders' insurance, conveyancing, new account costs for utilities, moving costs, bin hire, mail redirection ... Do you have it?
And then consider where you're planning on buying, and whether prices are set to rise in the near future.
If they're not likely to, then maybe it would be good to have your third bubba without the stress of having to rush back to work if you'd rather have some time off.
If they are, perhaps it's best to get into the market and put some extra payments in, to give yourself a buffer.
The advice that Peanutter and the other girls have given you is really good. The most important thing that you can do is calculate as closely as possible how much it will cost you to have a house/unit.
Don't just go off what the lenders will say that you can afford. The amount they will lend you will probably be more than you will be able to repay comfortably. The key word here is comfortably - I know this is a generalisation and everyone has different living standards and $ amounts they spend each week so what I've just said may not apply to you but in general it is true. When lenders are calculating what you can afford to borrow they do two things - they load the rate that you will pay by a buffer to cover you in the event of rates increasing and they allocate a $ amount for living expenses which they take off your net income to see whether you can afford the loan or not. However the $ amount they allocate for living expenses is basically calculated on the poverty index ie the minimum amount that someone needs to be able to live. It seriously doesn't allow for any extras - for exemple allowing approx $5-6K per year for a child! For everything for a child!
What I would suggest you to do work out what you do really spend is to sit down and go through the last 12 months of credit card and bank statements and write down everything you have spent and then work what if anything you can not spend. Then look at what the "new expenses" will be. You'll then have your true spendable income.
Everyone does tighten their belt when they take on something like a mortgage but you need to make sure that you are able to tighten it.
Owning a house might be the ideal as it is great to be on the property ladder but not when you are unhappy and stressed out doing so. And you do need to have the contingency for the unexpected things that do go wrong when you own a house, you have pay for it and not the landlord.
If you can do some saving its worth while putting it into a high interest savings account - maybe when you've got those debts paid off.
PM me if you want more info. I work in the mortgage industry so might be able to answer some of your questions.
Thanks heaps for the advice! So should I be basing it around say 500 a week or something for mortgage repayments? Houses in the area we want to stay vary depending if you want new or old.
I'll talk all this over with dp at the moment out finances are completely separate but a baby together will need to change that.
The extras that come with owning your own home is what we are afraid of. Plus dp isn't fantastic with money but is slowly getting better so saving a bit might give him incentive to keep getting better!
Thanks again :-)
I honestly don't think being in a home of your own is the be all and end all that its made out to be. So really think through whether its what YOU want. Bugger everyone else and their opinion. It's what you and DP want to do. Both my brother and myself had it drilled into us that renting was dead money. You're paying someone else's mortgage. Blah blah blah. We both bought houses young. We are both now renting after selling our respective houses at a loss. It definitely cost us significantly more, both in money and in stress etc to buy and then sell. We bought at the middle of an upswing in house values in our town, where we had pretty much a guarantee of rental tenants from the local uni if we wanted to live elsewhere. Then the uni built more housing on campus, property prices plummeted, and our houses were on the market for months, to sell at a loss.
Do I regret buying when I did? No, not really. I learnt a lot through it. But I'm not in a hurry to go back now. I'm content paying my rent, being able to make a phone call when something isn't right and someone else bearing the cost of repairs. I am now living a lot closer to work, and paying less in rent than I was on the mortgage, as well as probably 80% less travel expenses. I know I'll be in my job long term. So eventually we may look at buying again. But I want my personal loan (covering what we lost on the sale of the house!) paid out first. I want to save for a few years so we can pay the biggest deposit possible. And I want to buy something that we are in love with. Not just something so we can say we have bought a house. And who knows. We may decide to keep renting and use those savings for something else like sending dd to a better school or taking her on a huge holiday. I'm not sure, when we die, if she will be more appreciative of a house with a heap of debt or the memories of what we could do with and for her growing up. I know I'd prefer to keep working part time and have dh home with dd than to have us both working full time to pay a mortgage...
Just do what is right fur you guys. Don't worry about the opinions if everyone else. Only you are living your life. Only you know what's right for you
Last edited by briggsy's girl; November 4th, 2012 at 07:02 AM.
Hi will send you a pm later today with some figures to help you with your decision making. Stating the obvious but the $ amount of your repayment is based on two things the amount you borrow and the rate that you have to pay. The rates can go up or down so you need to make sure you have a buffer for when they might change. What state are you in as I'll include some costs for getting into a mortgage that you might have to pay also.
The rule of thumb used to be take your gross income and multiply by 3 for the house that you can COMFORTABLY afford to buy. Banks will lend you a lot more than that so as others have said, don't base it on what they will lend you.
Just use one of the bank's mortgage calculators to work out what your repayments would be. Without knowing the price of houses in your area, it's impossible to know whether $500 a week is a good estimate or not.
Just on the other side of the fence... We bought our first house, sold it and now building our forever home. We rented for 8 months off my parents when we were 18.
I love owning my own place because I can do what I want with it, if I wanna paint that wall I can, if something breaks I don't have to ask to have it fixed and then wait for it to happen, I don't have to run around like a blue arse fly and clean for rent inspections, I know no one is going to randomly up and sell my house on me or that I'm going to get booted out for whatever reason... I just love that its mine and I'm not "borrowing" a house from someone. Our mortgage repayments are actually $200 less a week than what we would pay to rent something the same. If you do want to buy do your research is my advice. There are smaller lenders that offer better interest rates than the big banks.
We have saved .7% by not going through one of the big banks. I know that doesn't seem huge on paper but it is in the big scheme of things!!
Thanks everyone and nw3 that would be great thank you :-)
For something decent in my area with not to much updating to do is probably about 330-350000 average which I guess compared to other areas may not be that bad but it is defintely over our combined income x3 even if we had a decent deposit.
I think the first step may just be to stay at dads and make the most of cheaper rent. He will sell this place in about 2 years though but I have known that since I moved in. A lot could be saved in 2 years even with a third bub.
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Not sure what to do!
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