What if you get a new house? One that’s better, bigger and more luxurious than your current home? Your dream of attaining a better standard of living will finally become a reality then. It will also be exciting to live in a house that is much more luxurious and larger than your current home.
But what’s next? Before you start fulfilling your “living happily ever after” dreams, there is a lot more to it. Living in a larger house (with the same monthly income) comes with a cost.
Why it’s not such a good idea?
Owning a larger house has two downsides related to it.
- Firstly, increased day to day expenses; like the cost incurred in cooling or heating such a large house, its cleaning costs, electricity bills etc
- Secondly, its upkeep of or renovation is more costly.
Thus, being on the same income figures and shifting to a larger house means less affordability. But these are not the only costs that will use up your income. Monthly mortgage payments along with the interest will also take away a significant portion of your income. In addition to this;
Larger House = Higher Mortgage
Yes; a larger house will be costlier to buy and more cost will require a higher mortgage. Ultimately, setting the same monthly mortgage payment as the monthly payment of the prior mortgage will also cause the buyer to keep paying for a much longer time period. This practice is however, mostly discouraged in the world of real estate as the only thing it will do is put you in a difficult position.
Nonetheless, if these things don’t hinder your path and you definitely have to move to a larger house because of having a larger family or any other reasons, it is an option that is available.
Here are some other crucial things to know before upgrading to a larger house with the same monthly mortgage payment.
Firstly, you should answer these questions to get a better perspective with regards to the purchase.
- Have you got finances for the property tax and insurance premiums?
- What will you do about filling the empty space in the new and larger home?
- Have you saved up for all the hidden costs or at least estimated what their amount will be?
Moving on, now come the steps that you will need to take to move to a larger residence:
Sell your house First
Before the complete purchase of a new house, you should sell the one you are living in currently. Selling your property while the mortgage is not fully paid is a fairly common situation. You will sell your house, and on receiving an amount higher than the mortgage, you can then use that amount to pay off your mortgage.
You may also get lucky, sell the house for a much higher price and after clearing out the mortgage, still have some amount left. But if the selling price is not able to cover the mortgage, you will require permission from your mortgage lender for selling that property.
Determining the New Location
Often times, the surroundings of a house play a significant role in the determination of its selling cost. The availability of schools, colleges, hospitals and parks in the vicinity of the property raises its demand. If you wish to move to a larger house with the same monthly mortgage payment, it is ideal to refrain from such top end locations, as it will only result in increased expenses.