House choices

Teledude

Teledude

Teledude

Soldato
Joined
4 Dec 2003
Posts
2,847
Two hyperthetical but possible situations....

You currently own a 2 bed semi in a nice area with the plans for kid(s) within 18 months.

In 3 years from now would you like to be....

a, mortgage free with a possible house extension to take it to 3 bedrooms and other refurbs if bugets allowed.

b, save hard and go for somewhere bigger - c400k, 3/4 bedroom - the likelihood being that would entail saving very hard for 2 years and being lumbered with mortgage payments of double the current payments for another 25 years. You would also benefit from slightly increased living and outdoor space.

I think a is a no brainer but the mrs is dead set on b :o:confused:
 
Teledude said:
Because? :)
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:)

It's worked well for my parents.

They've always stretched and bought the best they could possibly afford, and tell me that's a pretty good rule to live by. We've moved around a bit but every house they bought since I've been around (24 years, 7 moves (some of them rental)) has been sold for more than double. Obviously they've been lucky but it means their last place sold for 7 figures and they've been mortgage free for 5-10 years or so.
 
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Stupot_ said:
:)

It's worked well for my parents.

They've always stretched and bought the best they could possibly afford, and tell me that's a pretty good rule to live by. We've moved around a bit but every house they bought since I've been around (24 years, 7 moves (some of them rental)) has been sold for more than double. Obviously they've been lucky but it means their last place sold for 7 figures and they've been mortgage free for 5-10 years or so.
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Fair point but I can't see property prices doing that anymore - unless someone has another view?
 
Personally I would go for number 2 but thats because I think that now is a really bad time to buy and you could find your house lose 30% percent of its value if the housing market returns to a rational pricing structure in the next few years.
 
Nitefly said:
Beware the stress of an extention! Can take an ice age from start to finish.
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gonna be a damn sight shorter than a new 25yr mortgage at twice his current repayments tho :p

( i'll take option A, extention & mortgage free in a few years, that would be worth it's weight in gold to me personally ).
 
fez said:
Personally I would go for number 2 but thats because I think that now is a really bad time to buy and you could find your house lose 30% percent of its value if the housing market returns to a rational pricing structure in the next few years.
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So because houses are likely to go down in value soon, they should buy the most expensive one they can and end up in negative equity?

Oh, and A.

No mortgage = more savings, which could be stored up for the next price-crash in the housing market or something.

What people also need to do is look beyond what they paid for a house and what they sell it for. If you lived in a house for 5 years, then sold, that is 5 years worth of rent that you didn't pay, and should realistically be deducted from the 'value' of your house to see if you broke even or profited from a sale.
 
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B. Your kids will go to a better school (i assume the bigger house will be in a better area), you and your kids will have more space to live in, you will have space to expand the family and you will have a nice asset which will appreciate in value over the next 25 years.
 
Teledude said:
Fair point but I can't see property prices doing that anymore - unless someone has another view?
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That's very true. However I still think you can do well off it if you buy smart, don't mind doing a bit of decorating/building, something we've always done ourselves, and aren't prepare to settle down there for life. I quite enjoy moving anyway! (disclaimer: obviously I'm not talking from my own personal experience:))
 
Stupot_ said:
:)
It's worked well for my parents.
They've always stretched and bought the best they could possibly afford, and tell me that's a pretty good rule to live by
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that assumes that house prices will rise for ever
can you really see the average house, worth 170k now, going for a million in 20 years time?

I would say the cost of borrowing will go up in the next few years, higher interest rates means that rents go up, house sales go down, house prices stay unchanged for the time being
 
A.

Security is always a good thing. Your extension will likely add at least as much value to the house as it costs, so it's a solid investment. If you decide you want a bigger house a few years down the road, when kid #2 starts getting big enough for his/her own room, then you will have lost nothing.
 
Duff-Man said:
A.

Security is always a good thing. Your extension will likely add at least as much value to the house as it costs, so it's a solid investment. If you decide you want a bigger house a few years down the road, when kid #2 starts getting big enough for his/her own room, then you will have lost nothing.
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This.
 
I have seen my parents go for option B every time. I would probably go for option B as long as it was just a bit of a stretch and not too ambitious.

Although I don't understand why you wouldn't do it now. If rates are going up then get in there and get a good one while they are lower.
 
I have no idea what you should do, it depends on your job(s) and whether your wife is going to stop working. Whatever happens, kids will be a massive drain on your finances.
 
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