Kylie and her family of five went through the options of buying and renovating and finally decided to build. But how would they service two mortgages? Kylie shares her insights.
We’ve had pre-approval to purchase an existing home for a few years now and haven’t had much luck finding anything.
The market is very competitive and, because we had an existing property to sell first, any offers we made had to be conditional on selling that property. With cash offers being put up in competition to us, we felt we didn’t stand a chance.
We considered selling our property first. However, with a lack of rentals available in Wellington we were concerned that we would end up homeless. Plus, the animals would make that hunt for a temporary rental even more difficult.
We also looked at renovating. However, with estimates at over $80-$100k we finally came to the decision that we might as well build.
This led to the inevitable question: How could we afford to pay two mortgages?
That’s where Brendon, my trusty Velocity mortgage broker (who also happens to be my boss) stepped in.
We’ve recently secured a “turnkey” build in Kelson with a small five per cent deposit from the equity available in our existing property.
A turnkey is where you place a small deposit down, and only pay the remainder once the property is complete, hence the name “turnkey”. This can be a slightly more expensive way of building, however, there are no additional costs involved, and no overheads to worry about. Our contract even includes the letterbox and planting, and the only things excluded are the curtains.
The downside is that the plans have already been signed off with the council, so we have no control over the layout of our new home. However, we can choose the colours, kitchen, carpet and so on. We had a number of plans to choose from, so we picked one that suited our needs.
Still, there have been some risks involved.
We haven’t sold our existing home. So if the market crashes when it comes time to selling, we’d be in trouble. Worst case, we’d lose our deposit or have to go to court (unlikely, however, let’s not rule it out!).
This risk was clearly laid out to us (thanks boss!), however, even if we sell our house for $100k less than the current value, we would still be able to complete the transaction. So we have decided to proceed, knowing that in a slow market, or even if a market correction occurred, we should still be in a position to sell and move on.
Another issue is timing the completion of the build with the sale of our existing property.
We’re working closely with the agent involved with the new build, and he’s suggested that we put the house on the market once the windows are installed in our new build. We don’t want to have to move twice, however, we realise we may be homeless for a short period of time. Hey, Mum and Dad! Need some borders?!
Regardless, we are going to try to line up all the moving parts as best we can.
We’re looking forward to our double-glazing and toasty warm home, as well as having an extra toilet to share between all five of us!
No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.