Sell to get ahead?.

Hi.
New to this forum so please forgive for any stupid questions..

I'm in the thoughts of selling our new home at only about 2 years old / custome build.
We owe about 395000 and bought for 505k.
We bought in this area knowing a shopping complex will be build/chemis/cafes etc around our estate. Good investement.

Our funds are comfortable (not rich) but i just dont like the thought of living around our mortgage debt. We dont owe anything else just our home.

What im thinking selling our home say 550-600k leaving us with 200k/150k cause we only owe about 395k.

Now if we did sell it at the price say 550k we would have 150k to spend on our new home. But this time we will buy a exsiting home and look around 300-350k.
If this happens il drop 150k and now only owing 200k which will be more comfortable for us. May even sell at a higher price.

Im 36 and would love to have NO morgage by 45 would this be a good move?

 

Say you have mortgage by 45. You own your own (cheaper) home. Then what do you do for retirement?

Are you doing this because you are stretching with the repayments, or you just dont like debt? Would you be comfortable taking on debt to buy investment property or shares?

there is no right or wrong, but beware of playing it so comfortably and conservatively that you dont reach your goals. In fact, set your goals first.

 

Following that logic to its end, then it would be a "good move" to sell up and live in a $200k/$150k home right? Because all debt is bad in this scenario?

But my point is actually that its a personal decision really, in terms of what level of personal debt you're comfortable with vs the quality of a PPOR you're comfortable with living in.

 

Factor in sale costs (agent/conveyancer/lawyer etc) along with purchase costs (govt/conveyancer/lawyer etc)

~$400k debt @ age 36... is there 2 of you working? Typically income continually increasing as maturing employment wise.

Hows the partner, family going to go in cheaper house.

I would love to have NO mortgage tomorrow, but I wouldn't sacrifice my beautiful house for it.

PPOR is always a personal choice, what are you prepared to sacrifice to maintain your standard of living.

 

Sure no debt would be nice, but wouldnt give up the future gains. Depends if you think get ahead means less debt. Its not so simple.

 

Whats an a investemt if you can enjoy it.

 

You can make a 200k house with little work just as nice and have more money in pocket. Iv achieved all my toys by 35 and still enjoy them but now really starting to see having a simpler life is better

 

Its like having $1m doallrs in your account but cant enjoy it till your 60-70 years old. Im 36 year old thinking now to sell have a smaller house paid morage by 45 even soon and enjoy life instead the morgage controlling me.

 

No doubt, you can also have a $100k house. Doesn't mean it's going to work for everyone.
By all means if you and even more so the family are happier by downsizing, go for it.

But I wouldn't think about it at age 36. I'm 32 in a few month I'm thinking of up sizing.

 

I know a older couple bought/build new home at age 50/60 is still around the 300k mark. On a buget everyday trying to pay off the big house. If they did sell prob get around 500-450 so that would be around 150k -200k in ther pocket to start a new home/ at that age i would hate to do that.

 

If it works for you, great.
Just consider the impact on your 50s, 60s etc
If your comfortable with the risk, theres no right or wrong.

 

Prior to this house, this is our second home. In a big way wish we didn't upgrade lol

 

What do youe mean impact in your 50s/60s? All i see is i dont want tk pay anything off wen im in my 50s n 60s thats why im looking at my options..

 

Less assets now probably means less assets in your 50s and 60s. Consider what you will retire on, helping the kids into houses etc.

If the 550k house doubles its 1.1m. If the 350k house doubles its 700k. You have an extra 400k for retirement but balance that against higher payments now.

Even more simplistically, extra $1 of debt gets you extra $1 of assets. Debt costs you the interest rate. Assets grow at the growth rate. Long term.....

Taking on debt makes the most sense in your 20-40s as your income is high and jobs more secure. Esp if that leads to more assets for the future.

but regional vic may not have the same economics as syd / melb.

 

Good info that makes sense. I seriously cant see the property going up any higher than 650k. Biggest plan is to get the morgage smallest possible than buy a flat/unit and invest in that while we live in our paid home buy 45 and leasing the flat/unit. I dont know if im thinking right so any advice would be grear.. im not your high paid worker or lawyer or offshore work just a normanl guy wil normal pay.

 

Have you considered renting out your house and renting somewhere cheaper yourself?

 

Will you use the equity in the ppor to borrow 105% for the investment unit?

 

Have you tested out actually living in a house around the $300-350k mark? We did that a few years ago, as we're pretty frugal. It took less than a year for us to work out that life's too short to live like that if you don't need to. We discovered that a house that we would want to live in, in a regional area that has everything we want costs around $700k. Saving and enjoying life is a balancing act.

It's a question only you can answer, but I've invested in a lot of lower end properties and did very well with growth but that's because we held about 20 of them at a time. I agree with the comments above, if you buy a ppor in that price range you'll go backwards financially unless it's part of a plan to invest more funds that you saved on the ppor in other assets/income streams. On its own saving money is an extremely slow road to wealth.

 

Yes.. dont want to rent.