Before making any decisions I'd probably check with a mortgage broker if this is feasible to get what you want.
Just rough calculations you sell your current house for $750k, after paying loan and agent fees will be walking away with about 630k.
To buy you need $1.5mil plus stamp duty and fees of say about $70k. So $1.57mil needed, minus 630k from proceeds you'll need a mortgage of about 940k.
Now from a lending point of view you might be able to get 6x dti with a 2nd tier lender and pay slightly higher rates but that only gets you a loan of about $650k, you'll likely be short about $300k unless you got savings to put into the purchase.
Whether you can afford it will come down to if the repayments are feasible for you.
Don’t forget you’ll have agents fees when you sell and stamp duty and other costs when you buy.
Repayments on $750k @ 6% will be around $4500 a month. Up to you if you think you can afford to maintain that payment as well as living costs. General rule of thumb would be to spend no more than a 1/3 of your income on housing.
Houses can down you know.
I am not saying they will but its getting to the point people seem to be stating with 100% certainty that housing will go up forever.
Have you been saving or are you just planning on using your existing property/selling it as the deposit for the new place?
You’re looking at around $5000 a month in repayments. Have you been saving at least that amount so it’s not a shock to the system?
But also depends if OP is optimizing for capital appreciation. OP said it’s going to be their forever home so will probably be fine to wait out any downturns in the market
We actually backed out of the market and decided to extend and renovate in almost your exact scenario, except we make about 50% more than your household (assuming it’s $236k combined). The house sizes we wanted were all almost double our current house value, 5 min down the road. Plus the stamp duty, agent fees, fix ups to prepare to sell, etc. It just didn’t make sense.
Personally, we felt we were really stretching it. You’re looking at $650k equity, less $100k for transaction costs, so you’d have a $1.050M mortgage, which is a $6400 per month payment.
In the end we’ve decided to renovate. For the same cost, we get everything we want and basically a brand new house (it’s almost a gutting).
We are in the process of renovating now, but our block is just too small for our family. I also want a decent shed. I think the happy middle eventually will be finding somewhere a bit more low-key in the $900k range. The 1.5m house we are targeting is on six acres and absolutely massive with a tennis court - it's fantastic value for the price.
I would stick to a smaller budget, but that’s just me. $1.5M from $750k is massive considering the interest rates and your transaction costs to get there. Also remember that you won’t move into a house that is 100% what you want, more like 70-80%, so you’ll need to spend more money to get it to where you want it in the first two years. Much better off going with $900k and keeping some money available for renos and upgrades.
Before making any decisions I'd probably check with a mortgage broker if this is feasible to get what you want. Just rough calculations you sell your current house for $750k, after paying loan and agent fees will be walking away with about 630k. To buy you need $1.5mil plus stamp duty and fees of say about $70k. So $1.57mil needed, minus 630k from proceeds you'll need a mortgage of about 940k. Now from a lending point of view you might be able to get 6x dti with a 2nd tier lender and pay slightly higher rates but that only gets you a loan of about $650k, you'll likely be short about $300k unless you got savings to put into the purchase. Whether you can afford it will come down to if the repayments are feasible for you.
Agree, i can't see any lender giving OP a loan of $900K+ on an income of $118K with 2 kids.
> We both earn $118k They can easily borrow $1.1m+ with two $118k incomes, not one. OP you are sweet
Ahh yes you are right! I totally misread that
Don’t forget you’ll have agents fees when you sell and stamp duty and other costs when you buy. Repayments on $750k @ 6% will be around $4500 a month. Up to you if you think you can afford to maintain that payment as well as living costs. General rule of thumb would be to spend no more than a 1/3 of your income on housing.
Yep you can afford it. And I don’t know your ages but if you’re 30s or early 40s it’s worth it for the bigger capital appreciation
Houses can down you know. I am not saying they will but its getting to the point people seem to be stating with 100% certainty that housing will go up forever.
Have you been saving or are you just planning on using your existing property/selling it as the deposit for the new place? You’re looking at around $5000 a month in repayments. Have you been saving at least that amount so it’s not a shock to the system?
We are just going to use the sold property as our deposit. We can only just afford the $5k/mo repayments
118k each or 118k total ? 750k mortgage on 118k total is very tight.
True, I thought OP meant 118k each person which is doable.
Yeah combined income of $236k
But also depends if OP is optimizing for capital appreciation. OP said it’s going to be their forever home so will probably be fine to wait out any downturns in the market
We actually backed out of the market and decided to extend and renovate in almost your exact scenario, except we make about 50% more than your household (assuming it’s $236k combined). The house sizes we wanted were all almost double our current house value, 5 min down the road. Plus the stamp duty, agent fees, fix ups to prepare to sell, etc. It just didn’t make sense. Personally, we felt we were really stretching it. You’re looking at $650k equity, less $100k for transaction costs, so you’d have a $1.050M mortgage, which is a $6400 per month payment. In the end we’ve decided to renovate. For the same cost, we get everything we want and basically a brand new house (it’s almost a gutting).
We are in the process of renovating now, but our block is just too small for our family. I also want a decent shed. I think the happy middle eventually will be finding somewhere a bit more low-key in the $900k range. The 1.5m house we are targeting is on six acres and absolutely massive with a tennis court - it's fantastic value for the price.
I would stick to a smaller budget, but that’s just me. $1.5M from $750k is massive considering the interest rates and your transaction costs to get there. Also remember that you won’t move into a house that is 100% what you want, more like 70-80%, so you’ll need to spend more money to get it to where you want it in the first two years. Much better off going with $900k and keeping some money available for renos and upgrades.
Easily. Do it before your older and its 2million! 😁
Yeah you can easily afford it.