Author Topic: Advice re downsizing house or staying put (Australia)  (Read 867 times)

Confused

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Advice re downsizing house or staying put (Australia)
« on: September 24, 2016, 11:59:44 PM »
Hi everyone

I'm an Australian 37 year old with two children, just looking for some people's thoughts on whether we should stay in our current home or move to a smaller place. Our current home has been valued at $800,000. We are soon to be selling some land which will pay the mortgage out on this house so we will be debt free. However our income is very low at the moment. My husband has started a business with so far no profit and that probably won't be changing soon. I am working full time to support us which is paying for all food, bills, current mortgage and minimal spending. We love the house we live in but are deciding whether we should stay put or sell and downsize. The negatives to downsizing is that we would essentially be losing about $40,000 in commission, stamp duty on next house and moving costs. We are also in Qld and have a full solar powered house and receive the highest solar feed in tariff rate (I think it's 44c a kilowatt). So we would lose this as well. But my husband thinks we would be better off downsizing to a smaller property of about $550,000 and then investing the remaining $200,000. I just can't get over the fact that we would be throwing away $40,000 to do this. Any advice on what you think we should do?

happy

  • Walrus Stache
  • *******
  • Posts: 5932
  • Location: NSW Australia
Re: Advice re downsizing house or staying put (Australia)
« Reply #1 on: September 25, 2016, 04:28:25 AM »
Properties are so expensive in Australia, and so are the selling/buying costs. Different people will have different responses to the question and I think the answer should also take into account things like:
- how much too big is the house? If its large for 4  eg>200m2, maintenance costs will be lower in a smaller place
- is it a high maintenance house or is it in good nick with low estimated future maintenance?
- how long have you lived there? As you have noted changing houses frequently is a good way to lose big bucks fast.
- how long would you plan to stay in the next house
- if you move, is it just a smaller house or will you lose other factors e.g. not so nice an area, schools etc
- if you move what effect will it have on your commutes, childcare etc
- what proportion of your net worth is in the house? If its all house at $800k and nothing much else this is unbalanced, although once the mortgage is gone you can redress this by saving hard into investments. 
- what is your overall FIRE plan, and how does the house and its value fit into that? 800k in your PPOR is worth rent money plus likely capital gain for your area ( if any) in you retirement planning. But its not liquid.

No need to put all this info online, just some questions to consider and discuss amongst yourselves.