2014 BellyBelly RAK Recipient.
WWYD?
We have a plan. It's been a solid plan for over a year. Early next year, we are looking to refinance our mortgage (which will drop our replayments by close to 50%), and purchasing some land. In 2013, we will move into my mum's house and then sell our home. We will then live at my mum's for two years while we build our dream house. We're hoping the builder will take us to lock-up and then we can finish it ourselves.
As it stands right now, today, we're looking to make $100K on our house, on what we owe on the mortgage. We bought a house and land package, in stage one of an estate in a booming Melbourne surburb. We need that 100K to be able to finish off the dream house. We'll go to the bank for finance for the land and the build to lock up.
But we're scared that the butt is going to drop out of the market, and we won't get what our house is worth at the moment. On the other hand, we're scared that we're going to jump too early, and not get more for it. There are things going on in the area that I think will help hold the value. 1km up the road is going to be Woolies, Dan Murphy's and Big W. Our estate is going to home a brand new community centre. All of this will be in the process of being built by the time we plan to sell. The house is on a small block, but opposite parklands and the house is totally finished. We've had numerous people come through and comment on it, favorably.
Although he hasn't said it, I know DH wants to go now. He is really concerned that work will dry up, and then we won't be able to either make the mortgage repayments, or for that matter, sell. We're about to go into a new area of his business that will guarantee work, but he's still very wary, and I understand that. But I'm not ready to move into mum's. I love her dearly, but I like being in my own space. I know that (should we be so lucky) when we have another baby, bonding will be more special if we're alone. Neither mum or I work, so we'd be together 24/7. We've lived together before, while we were building this house, but I was working. When we move in to their place in 2013, they're going travelling for the two years we'll be living there, giving them someone to live in their house, and giving us somewhere to live. Mum doesn't care when we move in, so there's no issue there.
So what to do? What would you do? Am I being unfair to DH? Should we just do it, guarantee the money? It'll mean it's five years before we're in our own home again.
Moderator
Can you just clarify for me, the two options?
1. Re-finance existing mortgage early-2012. Use funds from refinancing to buy land and start building. Live in current house until 2013, then move in with mum. And do what with current house - sell?
2. Move to mum's now, speeding up option 1 by 6-18mths?
Is that right?
2014 BellyBelly RAK Recipient.
OP - We won't be building on the land until at least 2014. So next year's refinance is just for our current mortgage. We're hoping to get a second loan for the land, and then just sit on the land until we want to build. So in March next year, we will refinance current house and go for pre approval for land purchase.
If we move in with mum now, we will be selling our house now, buying our land now, but still not building until 2014. The deal with mum is that we have to live there until they return home in 2015. Does that make sense?
2014 BellyBelly RAK Recipient.
Registered User
I understand your concerns with the market at the moment. It is very worrying and nobody really knows what will happen... We've had so many years of unsustainable growth, that the only thing that one can be certain of is that it ain't going to grow much. It might crash, or it might not... You don't know.
But what about looking at another option... Could you sell your house now to secure the equity you have and rent for a year or two until you move into your Mum's place? That way you could invest your $100K and earn some interest, and possibly rent a place for less than you're paying on your mortgage so you can save more in the meantime. It also means that if your DH's work does have some ups and downs you're not locked into a mortgage and also have the security of having some cash behind you...
We did something similar earlier this year and we haven't looked back! We're renting a place for the same amount that we were paying on our mortgage, but it's much bigger and more suited to our needs. And it is so good to check your bank account each month and see your money grow!
HTH
Registered User
As someone who has just spent 18months living with their parents personally I wouldn't move in with your mum if I didn't have toWhat kind of relationship do you have with your mum? 24/7 would probably drive me insane after a while. Also what would you do with all of your stuff, put it in storage (costs $) or is there space for it at your mum's?
I like Miss E's suggestion of selling and then renting if your DH is really worried. You still have your own space, probably paying less in rent compared to mortgage repayments so can save up for a bigger deposit on your land.
Moderator
So sorry!!! I asked for clarification and then left work and got home and you know how it goes when you get home!!!! Bad friend, bad friend! Let me think over it now...
Ok so its a question of selling now and moving in with mum, or selling in... 2013 and moving in then?
I'm torn. Part of me says hold on to your property for as long as you can, because the growth I have seen in even 18mths has been pretty huge. But that is in my area - your area is different, I've watched the market at the L development down the road there and it doesn't seem to be growing as quickly.
There will probaly still be growth - but it is enough to justify staying for an extra 18mths? Hmm.The market could do anything in 18mths. Do you think you'd be able to sell now?
Is DH's work really a concern? We moved when DH had just started a new business - we managed. We had some tough periods but we scraped through.
Are you parents near to where you are now? What else would you be compromising, moving to their house?
My sister has had two babies living with our parents. I don't think they would feel like they missed out on bonding time - but I can see that mum has had to restrain herself, be very hands off, so she didn't encroach on their special family time. Could your mum do that? Or would you be tripping over each other, living in close quarters, no choice but to hang out together?
Moderator
I should have added I really like Miss E's suggestion too. But I hate paying rent.
TBH, the more I think about it, the more I'd probably do it sooner rather than later. DH and I have talked about moving into his parent's house if they ever did a big trip like yours are doing... and I reckon if we planned that, I'd be keen to get in there as soon as we were able, to start saving money.
Financially - will you be better off if you go sooner?
in my opinion - thats what it would come down to if i had to make a decision now..
we currently have our house on the market - have had for maybe 4 or so months now?? have had 2 people come through, so youre not always guaranteed to sell straight away. maybe its worth just putting your house on the market now and see how you go...??
2014 BellyBelly RAK Recipient.
Thanks for all the advice!
We're not keen on renting. Once we refinance, our mortgage will be only a little higher than what rent goes for around here. I know it's about having the money in our bank account from the sale of our house, but we hated renting when we did it (over 5 years of renting). Plus I don't think we'd be looked upon too favourably with two dogs!!!!
Mum only lives 15 minutes away, in a large house. All of our furniture would fit at their place easily. I get along great with mum, she's fantastic, but 24/7 would get on both of our nerves! I think if we had a baby there, she wouldn't be able to step backwards. She was away for the first six months of DD's life, so I can imagine she'd be wanting to catch up on what she missed out on! She means well, and I hate saying a bad word about her, but I reckon after a couple of months we'd start to fight.
I guess my feeling is that the house will hold it's value. There is a house in the same street as us, exact same house, slightly larger block, but with a basic backyard and fit out. It sold in a month, with no advertising, just a board out the front. And for the price that we're aiming for. The house beside us is slightly bigger, but it leaves them less backyard space. Again it sold for the asking price, in two months - and it's not finished. No front yard, gravel driveway, only a couple of flyscreens. Cupboards have fallen down inside, the solar hot water was leaking at the time of sale and it has a broken front window (not cracked glass, but the window doesn't close). It sold for $20K less than what we'd ask for here.
Financially, we would probably be better off if we went now. Sigh. We'd have our profit in the bank, car loan paid off, no debts. DH wouldn't be under so much pressure for work. We were thrown into our own business a year ago, and in 12 months of advertising, we've had maybe a dozen calls. It's been word of mouth. So the way the predictions are is scaring us both. We have no money behind us.
I know the logical thing is to just move. Just do it. But I want more of "us". It'll be two years before we're on our own again, and then two more on top of that before we move back into our own home. I don't know that I can do it. Maybe we should hold out until next year. Put it on the market early next year. I don't know. Our marriage has taken a few big belts over the past few years, and we're finally on top of it all. We're in a really good, happy place and I'm concerned that moving too early will affect it, but not making the move soon enough with make DH resent me.
Moderator
There's the two most important points I think.
Finances are one thing... but your relationship is another.
Can you wait til the start of 2012? Its not the best time to sell anyway - better to sell when the weather is a bit more predictably nice on the weekends. Tell your DH you want a bit more time and revisit the idea in 6mths?
ETA: I hear you on the renting thing. I hated renting too.
Registered User
I used to think like this, rent is dead money ya de da etc etc... But seriously, if you're only looking at doing it for a couple of years I think it is a different story. After all the interest which you pay on your mortgage is pretty much the same as rent.
If you can rent something for a similar amount to what you're paying in interest and save the difference in what your mortgage payment is/was, then chances are you will be in the same position, if not better off, than you would be if you stuck with your mortgage.
This is because if you invest your money from the sale of your property in a term deposit, or even a high interest bank account, you should be able to get at least 6%. Yes you do pay tax on that, so let say you're earning 4% a year after tax. With the Melbourne property market in the shape it's in right now, you're unlikely to get 4% growth.
JMO
2014 BellyBelly RAK Recipient.
Thanks again for the advice. Writing it all out helps a lot.
I had a brief chat with DH today, and suggested we put the house on the market this time next year. It brings the sale forward by 12 months. Our front garden looks great in early spring, everything comes out in flower, looks pretty and inviting (well, I think so anyway!!!!). I think that if we allow up to six months to sell, then try and go for a long settlement, then that might work for us. We'll see what he has to say, but I'm hoping we can reach a compromise. I don't think it's going to be easy for me, whenever it is we sell. I know this isn't the house for us, but we've worked really hard to get it finished. Lots of blood, sweat and tears here. I guess I'll feel better too when we get our block of land. Then I'll actually know where we're going to be, where our future is. It's hard to commit to selling the house when I don't know where we're going to end up.
Moderator
I would find that really tough too! Are you going to be looking around the same area you are now?
Sounds like a good compromise. And a long settlement will help too.
2014 BellyBelly RAK Recipient.
We think we're going to end up a bit further out. Ideally like a few acres if we can find it, but the minimum we're looking for at the moment is one acre. I grew up on 18 acres, DH grew up on 5 acres, so living in a surburban shoe box is driving us a little bit insane!
Registered User
Hi hun,
I don't know much about property, but have you looked into the different tax implications of what your options are? Especially if you put the profits of a sale in the bank rather than rolling over into a new loan.
Also, if you are holding the land for a really long time before you start to build, will that mean you pay 2 mortgages for longer (or 1 mortgage on 2 properties)?
Also, this is totally not a criticism, but I can't help but wonder if your new house will give you the happiness you're looking for? Are you just chasing what you think will make your happy, give you the perfect family life, but when you get it you realise it's not enough? You've just build what is most likely a beautiful house, but it's not satisfying you. I'd hate to see you make the same "mistake" (in inverted commas as I don't know the full story and could be way off track!). Like I said, not a criticism, but I know sometimes I can fall into this trap.
HTH xoxox
2014 BellyBelly RAK Recipient.
Surpised - the house we're in now was the house to get us out of the renting cycle and into the property market. We always intended it to be a stepping stone. We bought a house and land package priced well under what the bank said we could borrow, knowing that buying in stage one would make us a nice profit when the time came to sell. We've made it into a comfy home, but not one we planned to live in long term, ITMS. We know we'll be taxed on our profit that we make for however long we have it in the bank, but we should gain some interest too which will help cover the tax. We'll be sitting on the land for about a year (provided we can find something we like when we want) before we build on it. So if we're lucky enough to buy our land next year and sell next year, then there will only be a short amount of time we're paying two mortgages. Hope all that makes sense!!!!! Thanks for your reply
Registered User
Sounds like you have all your bases covered hun!
I had a little giggle when I imagined you "sitting on the land" for a year... hope you have umbrellas!
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