Married with Kids: The Move from Apartment to House

Is upgrading from an apartment to a house possible? What does it take to make it happen?

For many families, moving from an apartment to a house feels like a natural progression as their needs grow. While this dream is achievable, it often comes with challenges, especially in affluent areas, requiring compromises or careful planning.

In this 2-minute guide, we’ll explore the financial aspects of upgrading to a house. Whether it’s securing additional funds, increasing your income, or making lifestyle adjustments, let’s break down the key factors to consider.

Crunching the Numbers

Start by assessing the financial leap involved. To keep things simple, focus on the mortgage debt. Use the MoneySmart mortgage calculator with a 6.2% interest rate over 30 years to estimate your repayments. This will give you a clear idea of the sacrifices required and whether the move is feasible.

Keep in mind: while you might afford the repayments, banks typically assess your borrowing capacity at 50% higher than your actual repayments. Approval is never guaranteed.

Other Key Factors to Consider

Income Stability:
Is your income likely to grow, remain stable, or decrease in the coming years? This will heavily influence your ability to upgrade.
Renovation Costs:
Moving into a house often comes with renovation or maintenance needs. Ensure you have sufficient cash flow to cover these expenses.
Timing:
Could waiting a year or two to pay down your current mortgage put you in a better position to upgrade?
Alternative Options:
Would a larger apartment or a house further from the city centre better suit your financial situation?

Rule of Thumb

For every $100,000 of additional borrowing, you’ll need approximately $10,000 in pre-tax income (or around $7,000 after-tax). Ask yourself: are you already saving this amount, or will you need to adjust your finances to find it?

Final Thought

Everyone’s financial journey is unique. Avoid comparing yourself to others and make decisions that align with your circumstances.

If you’re unsure where to start, book a 60 minute online or face-to-face consultation on Financial Wellness Hub and let us guide you through the first steps toward your dream home.

By Brett Tarlington