Ask SAHM is a place where you can ask our staff & community a question safely & anonymously. Please read our disclaimer.

Cheaper house or more expensive one?

My husband is on 160k/year, I am not working (2 kids under 3). We have a mortgage on the house we used to live, paid off almost 40% of it, owned it for 6 years now. We moved towns due to husband's new job. We've been looking at houses and found one that we really like for $220k, but it is a bit smaller than what we used to have, nothing fancy but it doesn't need any immediate work to it. There is another place that is heaps nicer, but they are asking 450k! My 'friends' in the new town all laughed when I say we were considering the cheaper house as they don't consider it to be in the nice part of town (nothing wrong with it, no drugs or housing commission, just cheap/old style houses). Bank says we can borrow up to 600k (!), but I believe we would have so much more disposable income if we went with the cheap one. And could pay it off really quickly and then move on to something bigger/fancier. What would you do? Keep up with the Joneses? Please help me, sahm's, bit of a dilemma here!

Report

Got an Answer?


Answers (12)

You answered you’re own question hun it will be your home not theirs and I would be reconsidering the “friends”

Cheaper one, pay it off sooner or renovate it, use the money you save on mortgage repayments to travel or put towards your next property. Home is what you make it!

 Couldn't have said it better :)
helpful (1) 

Thanks for all thoughtful replies :-) We just put an offer in for the cheaper house! I am so very happy!!!!!

Cheaper - if it was only $20,000-$50,000 cheaper I would say get the more comfortable one but the difference is huge! Not worth the added financial stress

Cheaper. With the current housing prices it is a good idea to go cheaper, especially in places where there is a higher market for younger buyers and more turn over. The young buyers come in to buy cheap, do it up and have to move in. They push up prices in the area meaning you make more money.

Cheaper. Without a doubt! It’s yours, you can free up money for other things and repayments will be more doable and should anything happen, you’ll be thankful for. We have a modest home, husband and I are about 60k ahead of repayments and almost $100,000 in savings, holiday twice a year overseas and always away interstate or camping school holidays.

More expensive one. Where are you living anyway? A very ordinary house in an ordinary suburb costs $450k in Perth. $220k will get you a small flat that needs renovating in the Bronx or a block with a shack that needs demolishing.

OP Regional NSW. 450k buys you a 3 bedroom modern/spacious home in a 1100sqm block :-) $220k buys you a 3 bedroom house in a 800sq/m block :-) I love how cheap houses are in country NSW!
helpful (0) 
 Omg amazing hun. My first home with husband 8 years ago was $560k for 500sqm!
helpful (0) 

I say shop around and find something inbetween the two houses you are currently looking at. Purchasing a house is stressful and a lot of consideration is required. Every day new listings are put up- hold off and you might find the perfect house tomorrow.

I have to say Im really suprised the bank will lend you that much with 1 income and 3 dependents, even on a high wage they usually dont! My friend was in exact same situation and they would only lend her 300.

Anyway, is there a 3rd option in the middle? Thats what I would do.

What are they like as investments? What happens if your husband job moves somewhere else, or he loses the job, which house can you sell easily.

 Banks do offer to lend way more than they should... when we got our mortgage a 7 years ago we went by my husbands 130k salary only. (House was 440k, we had 10% deposit. I was working, but as we planned to have kids within the next year or so decided to only use his income for the application. The broker told us that we were eligible to borrow nearly 1.1 million. Then he quickly added, I don't always tell people the actual amount, but I can tell that you're sensible people and will not immediately put another offer on a beachside mansion. so banks do offer more, and that's why housing prices are getting crazier each year as people over extend themselves.

So I would definitely go with the cheaper house if you like it and can live there and it ticks all the boxes! Good luck

helpful (0) 

If it's in a cheaper part of town that could mean it's not as solid an invested... or it could explode and make huge gain lol but it's a risk you take

Agree with all the above mentioned.

 Agree too, and would add, if there is a crash in house prices, in history its always been the more expensive ones that have dropped a much greater % of their value. That's the time to upgrade to the bigger better one ! You will get it so much cheaper.
helpful (1)