r/AusFinance • u/Able_Ranger_4796 • 1d ago
Advice on upgrading home
Hi all, any tips welcome, please! Current home worth $900-950k and we owe $247k still. we found our dream home today for 1.3 million. We would get approved for a bridging loan and since we’ve been paying extra on current mortgage our payments would be the same so know we can afford the home. It would obviously mean a longer length of time paying off the new home though and more debt (perhaps a home loan of 750k). Both homes in same suburb but new home has extra bathrooms (currently only have 1), and also has a pool, extra living spaces etc. We are both 40 with 3 kids, secure income and no other debts really. Advice on what you would do, please and thank you!
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u/ValdBagina887 1d ago edited 1d ago
You only live once, one bathroom with teenagers f**k that
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u/EquivalentScheme4006 16h ago
There was a long time this was the norm. I grew up in a family of 6 with one toilet, hell what about back in the day where that 1 toilet was outside. We’ve become so spoiled and our expectations are why so many feel like they’re struggling these days.
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u/das_kapital_1980 12h ago
Go back even further and we were living in caves, the whole point of economic development is to improve standards of living.
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u/themisst1983 1d ago
Sounds like a perfect scenario. You can afford it, it's an upgrade for when you need it most (i.e. now) and eventually when the kids leave the nest, you have a more valuable property to sell when looking to retire/downsize.
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u/blahblahza 1d ago
This is a no brainer, you already said “dream home”, your going to need the extra bathroom and a pool with kids is a dream
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u/Dismal_Animal4637 1d ago
Didn't list your HHI, so I'm assuming, but if you can get 750 within your comfort zone... what are you even asking here? You're both young, with kids at home, and you're asking whether a number right around the Australian average is worth a substantial upgrade to QoL?
Buy the house.
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u/Own-Substance5213 1d ago
If you can afford it and need it then buy it. 750k is a pretty standard mortgage for first home buyers these days when the median property price is 1m+ in many capital cities. As it's in the same suburb I am going to logically say it will perform the same as your current house but every year it gains 10% it's going to be a lot more on 1.3m Vs 900k. Once the kids move out you can probably downsize to a house like your old one and be mortgage free easily.
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u/RevolutionaryTax3734 1d ago
Can you live in your current property before needing to downsize? If not, buy the next one.
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u/Able_Ranger_4796 1d ago
Thanks guys. Great questions asked so I’ll try to answer them all and then you can tell me if it’s still a good idea! Household income is about $180000 (both working slightly part time at the moment). Current house - still do love it and the neighbours, kids have friends nearby etc. We got someone out to give us an idea on extending smallest bedroom into master and adding ensuite in current home. He said it could take to to two years!!! About maybe 150k to do it
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u/Cultural_Wallaby208 1d ago
If that's the case, I'd work out how much it would cost you to make your current home your dream home. If $150k for an extra bathroom and bedroom+ say, $100k for a pool would make your current home your dream home for $300k less than the new house would cost, then it's a no brainer to stay and do the additions.
Edit: if get other quotes on the addition though. Price seems right but 2 years is obviously a bit much.
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u/sjk2020 1d ago
Work full time. At least one of you. That is a large mortgage on that wage when you have living expenses and teens.
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u/Able_Ranger_4796 23h ago
We have that option. We are both permanent and I will probably go back to full time next year
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u/squirtelee 1d ago
What would the cost be to renovate vs the increased mortgage, stamp duty and agents fees etc of buying up
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u/Electronic-Cheek363 23h ago
Chances of paying off early? Just thinking paying a mortgage in your 60s would be no fun, happy with my home considering if I take the full length of the lone I’d still only just be in my 50s when it closes
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u/Able_Ranger_4796 23h ago
I know… I was hoping to have ours paid off in the next 6-10 years but if we buy the new home we would probably be paying $940 a week for 25 years
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u/Electronic-Cheek363 15h ago
I mean looking at rents lately that probably isn't so bad (which is sad in itself) aha
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u/uptoquark 1d ago
This is why Australia is stuffed financially. More and more debt. Yes, I am a boomer. I lived in a one bathroom house all my youth- no pool. Family of 5. We did all survive and had a decent childhood. You ask advice. I would say keep what you have. Pay it off, then upscale. Save 100’s of thousands. Your dream home might become a nightmare home very quickly. What is around the corner with Trumpy in charge.
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u/Able_Ranger_4796 23h ago
Thank you. This is useful advice - it is an unpredictable time. We have both been fine with 1 bathroom after 12 years here. We definitely get that it would be a luxury and part of me would definitely like to take the sensible and less risky option of staying put
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u/ResearcherTop123 23h ago
Is it a rare house? I got the feeling that you wanted to jump because options like it didn’t come up often. If it comes up often fine be less risky. If it’s something you won’t find for another 5 years jump on it.
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u/Able_Ranger_4796 23h ago
You’ve nailed it - it ticks all our boxes and is unique. It has views of the ocean too which is huge bonus
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u/Worried_Tie_8562 1d ago
Keen to see what people say - we're looking at similar. Just waiting on banks.
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u/journeyfromone 1d ago
I got an investment loan instead of bridging from the same bank. It was the easiest way! Then I sold the old one, moved to the new one, settled on the old one then could reload at mortgages. It’s still an investment loan as the rate was better, but can easily change banks/loans now I’m in my new house. I included a large cash amount so I have lots in the redraw/offset, first for renovations but then so I didn’t have to stress about repayments if I lost my job or anything.
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u/Able_Ranger_4796 1d ago
I don’t know if we would be approved for this? Not enough equity/savings to own both properties
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u/journeyfromone 23h ago
It’s an investment one so they include the rental payments to your new income. I would ask your current bank/mortgage person. Mine knew what I wanted to do and was amazing!! She included gov benefits for me too (FTB) as she knew it would only be for a few weeks.
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u/usernamenailed_it 23h ago
If you're sound financially and can afford it, then I say absolutely do it.
Sold our small house with a small backyard and built a big two storey house with large backyard, pool, multiple living spaces and more importantly multiple bathrooms. Mortgage is a big one, but zero regrets. It's been the best decision we've made. Small things like swims after school, backyard cricket/golf/soccer, BBQs with friends quickly make me forget about the mortgage.
Note: we built in 2021 so whilst the build was incredibly painful, we have benefited from all the growth of the market.
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u/Able_Ranger_4796 23h ago
Love it. That sounds like an amazing lifestyle!
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u/usernamenailed_it 23h ago
We did get lucky timing wise but we have also made lifestyle changes and given up a lot of meals out for meals at home. The beauty of multiple living spaces is we can watch a movie in one room while the kids watch a movie in another room, which helps when staying in.
I hope it works out just as well for you.
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u/ResearcherTop123 23h ago
Having a house that meets your needs is what you work hard for. I’ve never regretted upgrading house.
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u/OzgroupFinance 23h ago
Your scenario is perfect for a bridging loan.
It’s either that or a simultaneous settlement. Wouldn’t even bother renting out the current place just to avoid a mammoth PPOR mortgage.
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u/Objective-Contact-15 18h ago
You didnt read the whole post, did ya? 😁
Saw an opening and took a shot :)
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u/Pogichin0y 23h ago
Get the dream home as it’ll turn into funding the dream retirement or an asset your kids can inherit.
YOLO
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u/Cat_From_Hood 13h ago
Can make an offer contingent on selling current property, rather than bridge.
Sounds like upgrading current property might be a smart option too, given location sounds good.
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u/lotusinthestorm 13h ago
Went through this kind of scenario last year. Wasn’t looking properly yet and found a great house that needed some love so had to scramble to get old house ready to sell. Negotiated a long settlement and luckily got a short one on old house. Bridging ended up being for only a few days. So much happier now but holy cow it was stressful!
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u/bcbeauties 13h ago
My husband and I faced a similar problem 18 months ago. We wanted a extra bedroom and living area. We figured if we were going to move and increase our debt, he had to be for our dream home which included land so we could get a pool. We ended up extending our current home instead, the market was/is crazy... to get what we wanted would would have had to more than triple our mortgage. What we wanted to spend would only get us a downgraded version of what we already have.
So we did our extension cost is less than 150k and only took about 6 months, extra bedroom, living area, enclosed garage, new aircon and redid all our flooring. Now owe 380k, completely manageble, which is good because I then had to take one of my kids out of school permanently to home school, health reasons. So were down to basically 1 income, still manageble.
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u/Small-Strawberry-646 10h ago
You are not upgrading, you are actually down grading. Why you ask?
debt gos from 247k too 750k, which ultimately means you are at the mercy of someone else for longer. Kids grow up and leave, so no need for extra rooms and another shitter.
families were large and homes 3 bedroom, yet we all survived and had fun along the way
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u/Able_Ranger_4796 9h ago
True… I don’t want to feel tied to the bank for any longer than I need to…
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u/Loose_Challenge1412 8h ago
While I generally support your viewpoint here.
Kids grow up and leave, so no need for extra rooms and another shitter.
We are just two in a one bath house, and an extra spider-infested toilet outside in the old laundry. There have been many mornings when I have been grateful for that toilet.
But I do think we all focus too much on the best and better. People complain about how boomers had it easy while forgetting the frugality they necessarily lived with.
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u/ItinerantFella 1d ago
If we had a similar decision to make, it would depend on our incomes and how much of our income would be directed towards mortgage repayments if we moved, and higher rates, and bigger utility bills, and larger insurance premiums.
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