Browse Forums Home Finance 1 Sep 16, 2009 2:59 pm Some friends of ours are having a dispute about their future homeloan. This is their situation... They have sold their house and bought land and want to build in the near future. They have very secure income aswell. They have approx $400k in equity and the husband wants to build a 32-35sq house and borrow about $100k, so the total project would be approx $500k which includes all the extras. His theory is that the mortage repayments will be very low and as they have young kids they would have a more comfortable lifestyle and be able to have holidays etc. They will also own the home outright in a shorter time too. The wife wants to borrow $250-$300k and build the big Mcmansion with all the trimmings . No point in explaining why as we all know what that means. The mortgage repayments would obviously be a lot higher with very little left over for life's little luxuries. So, the question is - if you were in that situation what would you do and why? 1) Build the smaller house so that you have more disposable income and a more comfortable lifestyle. 2) Build the big boy, have a lot less money left each month, but live in a palace Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." Re: Loan size - what would you do? 2Sep 16, 2009 3:25 pm I would be happy with a "smaller" home of 32-35 square ! We have a similar choice to make, although not in the same ballpark in terms of dollars. We could have sold our house and built "just a home" and reduced our mortgage by about 50K. We chose to move and keep the mortgage as is to make sure we got the home we want, with the finishes we want. I went budget on a few things for the house I am in now, and I have regretted it since day one. Building a home is a big thing to do, and you're there for the long term so if you do it, you may as well do it properly I say. You'll still have holidays, but not just as frequent. You will however be living in that house every single day of your life. If you don't enjoy where you live as much as you can, and know you could have afforded the "better" option then you'll regret going the "cheaper" option. If something goes wrong, you can always sell up and buy the smaller home and start over ! When it comes to property, it's obviously harder to move up than to move down. You only live once. That being said, if they can't something they like in 35 squares, then they just want too much I would go option "C". Get a mortgage somewhere in the middle. BUild the 35 square home and make sure it ends up top notch in quality and include everything you'll need in it. Blog is now up - http://www.jbdave.blogspot.com/ Re: Loan size - what would you do? 3Sep 16, 2009 3:33 pm I would go a bigger house, but only if being able to still live comfortably. With young kids, it's so easy to outgrow houses. We have 2 boys 6 and 2(nearly3) and one due in a month, and we are building our 3rd house. First one was tiny, second one was big, but it wasnt' right for us, this one, we are spending quite a bit on, but it is a house that we can grow with (well hopefully lol). There is plenty of space now and for when the boys are older. I plan on being there for a long long time, so we figured we may as well go all out. We did however look into repayments, and the issue of if my hubby ever went down in his salary, so that we weren't left with a mortgage we couldn't afford. We have actually been paying on our land for the last 6 months, what we will be paying with the total house and land, just to see how comfortable we will be and so far, so good, plus we won't have rent once it's built, so we will be better off. I'd say it depends if the house the hubby wants is going to be sufficient enough for them and the kids as they grow, or will they be aiming to upgrade sooner or later. Re: Loan size - what would you do? 4Sep 16, 2009 3:46 pm Option 1. I would be more than happy with the 35sqr home with all the trimmings. Sounds lovely. I'm pretty easy pleased, I also don't need the mcmansion as I am not into statius symbols. Building Thread viewtopic.php?f=31&t=13002 Site start: 8th July 2009 Handover: 11/12/2009! 5 months total build time. 40 sqs of luxuary...Bliss! Re: Loan size - what would you do? 5Sep 16, 2009 4:02 pm jbdave You'll still have holidays, but not just as frequent. You will however be living in that house every single day of your life. If you don't enjoy where you live as much as you can, and know you could have afforded the "better" option then you'll regret going the "cheaper" option. If something goes wrong, you can always sell up and buy the smaller home and start over ! When it comes to property, it's obviously harder to move up than to move down. You only live once. That being said, if they can't something they like in 35 squares, then they just want too much I would go option "C". Get a mortgage somewhere in the middle. BUild the 35 square home and make sure it ends up top notch in quality and include everything you'll need in it. That's a very good point about being in the house every single day and having to live with it. And option C is a good one to as it means meeting in the middle. The wife is looking at some 50sq+ 2-storey but they could do even 40sq for a lower price. I should also add that we have just built a new house and I think that is what's started this debate We have 34.5sq and the husband feels that they could quite comfortably live here. We have 2 small kids and it's plenty big enough (personally I wouldn't want bigger) but the wife has ideas of grandeur I think Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." Re: Loan size - what would you do? 6Sep 16, 2009 4:09 pm Bigger homes to me mean higher living costs, more maintenance and worse of all, more cleaning. When I sat down with my wife to design our new home we decided that 30 square of living was perfect (it ended up 35 square overall with right on 30 square of living). Also because we wanted a single storey home it takes up more space on the block, and as you can't "hide" stuff upstairs you have to make sure the whole house is clean all the time. It fit everything we needed in it, and it was as big as we wanted to clean ! Blog is now up - http://www.jbdave.blogspot.com/ Re: Loan size - what would you do? 7Sep 16, 2009 7:30 pm jbdave Bigger homes to me mean higher living costs, more maintenance and worse of all, more cleaning. When I sat down with my wife to design our new home we decided that 30 square of living was perfect (it ended up 35 square overall with right on 30 square of living). Also because we wanted a single storey home it takes up more space on the block, and as you can't "hide" stuff upstairs you have to make sure the whole house is clean all the time. It fit everything we needed in it, and it was as big as we wanted to clean ! That sounds exactly like us too We swayed more towards option 1. Anyone else??? Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." Re: Loan size - what would you do? 8Sep 16, 2009 7:49 pm Option 1 - what's the fall back option if a pink slip is delivered? ’’Quondo Omni Flunkus Mortati ’’ If the women don't find you handsome, they should at least find you handy. Stila BK1 Build Thread The best place to talk about sport Re: Loan size - what would you do? 9Sep 16, 2009 7:49 pm I guess we had a similar "dilemma" in that we could of built a big home just because we can but chose not to, I am quite happy with our 23 sq home and medium size garden (probably large by city standards) and Im very happy with my mortgage which is now only $10K, will have it paid off next year. But then DH and I were on the same page - tricky when one partner wants different to the other This lady sounds to me like the 'have to outdo the neighbours' sort and so I suspect she will still not be happy no matter how large and luxurious her house One thing about haveing young kids is that they only get dearer and haveing to put them thru Uni is very expensive,voice of experience here, also interest rates are going up and 250 - 300 K is likely to blow out to more, especially if she is fond of upgrading everything, could lead to struggles later and I suspect she is not the sort who is good at liveing frugally either. Im with the husband (no, that doesnt sound right ), house he suggests is still very good size, but I guess it depends what makes you happy Re: Loan size - what would you do? 10Sep 16, 2009 7:51 pm I'd go the smaller house and mortgage option ABSOLUTELY. I'd use all the cash not being used on the mortgage for a better lifestyle, or other investments... personally I think I'd sleep well knowing that my family home was secure and had so little owing on it. buzz Re: Loan size - what would you do? 12Sep 16, 2009 10:20 pm I'd definitely go option 1. Whilst we all want the McMansion with all the trimmings, I wouldn't want to stretch myself financially to get it. If I cant afford it comfortably, then its something to work towards. Plus with little kids, they'll just wreck the McMansion anyway. Best to save that one til they are older or moved out Caz & Co ALL MOVED IN!! Now comes all the hard work-decorating.... [b]Blog: http://cazoraz.blogspot.com/ Settling in Thread: viewtopic.php?f=31&t=36993 Re: Loan size - what would you do? 13Sep 16, 2009 10:47 pm Can I just qualify the unit of measure here? I am assuming that your friends aren't really going to build a 40sqm house as that doesn't seem extravagant at all. If anything, I'd say it was freaking tiny I am not a full bottle on the general unit of measure used when discussing house size, so if you could help me out with some clarification, that'd be great Hels And option C is a good one to as it means meeting in the middle. The wife is looking at some 50sq+ 2-storey but they could do even 40sq for a lower price I like this idea also. I think it is a really sensible idea to find some middle ground and make sure you aren't going to feel too boxed in, and also know that you aren't going overboard. Re: Loan size - what would you do? 14Sep 16, 2009 10:53 pm I'd definitely go with Option 1. viewtopic.php?f=31&t=22766 - my build thread! Time waits for no man. Unless that man is Chuck Norris. Re: Loan size - what would you do? 15Sep 16, 2009 11:23 pm I'd settle somewhere in the middle. If you have the option to build a house more suited to your lifestyle, versus building a house "that will do", then I would go the one that you can see yourself living in happily for the rest of your life. In saying that though, stretching the budget to breaking point in order to have an unnecessarily extravagant house seems a little silly to me. Lets face it, almost all of us on here have built or bought a house that was more than what we "needed". We only "needed" 2 bedroom, a study, a kitchen, a living/ meals and a bathroom, but we have a lounge, WIR, ensuite, 2 more bedrooms and a storage room as well. But this was what we saw us needing in the future to have a comfortable home, and a home that we could enjoy. But past this we both saw as being excessive. The bank would have lent us another 200k on what we borrowed and we could have built a house with a home theatre and a rumpus and an alfresco, but we would have taken 30 years to pay of the mortgage, and I really cant imagine having to wait until retirement to be able to enjoy my life and go on those great holidays. Built with Bentley homes in Doreen All moved in Dec 2009 Now for the garden! Our stuff so far viewtopic.php?f=31&t=16532 Re: Loan size - what would you do? 16Sep 17, 2009 9:56 am They also need to consider what other houses are around that area and they need to ensure that they don't overcapitalize on the build. (Obviously this will depend upon what other houses are in that location where they are building) Trent Bartels Residential & Commercial Finance Broker A & B Financial Solutions ...Solutions for your future info@abfinancial.com.au http://www.abfinancial.com.au Re: Loan size - what would you do? 17Sep 17, 2009 1:12 pm I've never really understood why people build a honking big house just because they can unless it's way too important to them what other people think. It makes a lot more sense to figure out what you need now and into the foreseeable future and that's what you build or buy. As someone already mentioned a large house cost more to run, heating, cooling, maintenance, cleaning, and it costs a lot more to fit out properly with good flooring, lighting, blinds, furniture etc, and that is extra money and time you could spend on other things. I personally know two families who went down the track of building large houses (in both cases it was the wife who wanted it while the husband reluctantly went along) and the arguements over finances etc ended up destroying these families, and I dont think this is ever something that people think will happen but it does, especially when both of them are on a different page. What's the point of building that oversized house if it ends up making you miserable and gets sold during the divorce? Re: Loan size - what would you do? 18Sep 17, 2009 1:38 pm definately option 1! Why build such a big house just for show if it means that well u cant live life! we faced this situation and we chose the smaller and live life, be a year by the time we leave on our holiday we are going to the cook islands at christmas, we get asked how can u do that if uve just moved into a new house, and well simple money wise! i suppose its a lot easier when u dont have kids still why go to your limits if you don't have too. Re: Loan size - what would you do? 19Sep 17, 2009 2:05 pm A&B Financial They also need to consider what other houses are around that area and they need to ensure that they don't overcapitalize on the build. (Obviously this will depend upon what other houses are in that location where they are building) This is a good point, although the estate has quite a large range of houses by the looks of it, but the big one would definitely be one of the biggest in there. Thanks everyone for your replies, it seems that the majority of members agree with the husband and think option 1 is the more sensible choice. I am going to pass on a lot of the points made in this thread Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." Re: Loan size - what would you do? 20Sep 17, 2009 2:09 pm cmooring Can I just qualify the unit of measure here? I am assuming that your friends aren't really going to build a 40sqm house as that doesn't seem extravagant at all. If anything, I'd say it was freaking tiny I am not a full bottle on the general unit of measure used when discussing house size, so if you could help me out with some clarification, that'd be great Hels And option C is a good one to as it means meeting in the middle. The wife is looking at some 50sq+ 2-storey but they could do even 40sq for a lower price I like this idea also. I think it is a really sensible idea to find some middle ground and make sure you aren't going to feel too boxed in, and also know that you aren't going overboard. A 40 square house is approx 360 sqm. 1 square = 9 sqm (think of how a noughts and crosses board looks with 9 boxes ) Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19097 Bought in Nov 21 at the height of the market (classic). Good area, atrocious floor plan. BUT has land out to the left-hand side that we can extend out on (see second… 0 8774 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). Would require a mini… 13 39716 |