AIBU for wanting to buy this?

[Kiwiinparis]

We live in a country where the housing market has sky rocketed over the last 5 years. My husband and I have been saving hard to scrape together a deposit while living with his parents for the last 2 years.

We decided to buy a property with my mum, which does extend our budget and takes us out of the first home buyer pool. We are also compromising by moving about an hour out of the city (not a huge city by world standards but the capital of our country).

Here’s the thing. Our dream house just came on the market. It’s everything we want and more, with ample room to comfortably house my mum, teenage brother (for the next few years) and us. My mum and I have absolutely hook line and sinker fallen in love with it.

The house is slightly higher than our original budget, but still workable. After paying for mortgage, insurance, rates, groceries, petrol, pets etc etc we would be left with approx $2000 a month for frivolous spending and savings.

AIBU for thinking that this is a healthy budget leftover, or am I completely in denial? My husband is a bit nervous about the price point, and doesn’t think we will have enough leftover for emergency savings/unexpected costs etc.

To put it in context a bit, if we were buying solo without my mums input we would be looking at paying exactly the same amount for a two bedroom, mouldy, damp awful house we would have to put at least $100k into doing up.

Would really appreciate some advice! I’m going crazy crunching numbers here

Is this in America?

Sorry, just with the dollar sign. It sounds like more than enough but hard for you residents to judge x

It all depends how far the 2000 goes in your country. 2k in the UK is loads for example.

How much does a family meal out cost for example? Or a cinema trip? Basic clothing for the family?

No not America! Southern Hemisphere.

Movie ticket is $15, mains out start around $20, basic clothing starts anywhere from $10-$30 depending where you shop. Cup of coffee is $5..you know the gist!

You'd need to ask someone local about that aus? NZ?

Can you tell us the country so we can convert from pounds?

Just noticed your user name. I'm not sure how much saving might be achievable. But i guess it depends how much of the frivolous spending is frivolous and how much is entertainment.

Would your 'spare money' be enough for unexpected expenses (e.g. emergency plumber, car troubles, etc.?)
That would be my primary consideration if everything else was affordable.
Will the details of ownership share be drawn up legally so that in the event of any family rifts there will be no legal disputes?

I think it's important to love where we live. We can't live our lives wondering 'what if`
I'd go for it
My home saved my sanity in lock down

Well sounds like you can afford it so I'd go for it! Not sure what converting to pounds would help, british economy pretty irrelevant in this case I would have thought.

Worth it and affordable but be realistic about scaling back on non essentials for the first couple of years so you can build up some comfortable back up funds.

It’s 1000 pounds if I convert it

It becomes about sacrifices. Which is worth doing if you love the house. Your DH needs to be onboard with the budget though, or he will become resentful.

Thank you for all the comments! All great things to think about. We are pretty frugal people! Don’t tend to go out for meals all that often, when we go out together we prefer to go on walks, to the movies, out with our dogs etc.

@Ponoka7 absolutely!! I want to avoid that at all costs

You need to look at what you are currently spending each month for the last year.
Opening balance in bank all income less spending and closing balance in bank.
List your spending everything is written down, split it into buckets.
Mortgage, insurance, rates, groceries, petrol, pets to the penny. Where is clothing haircuts etc the ongoing maintance for your new home the replacement for the broken item?
Then breakout the $2000 frivolous spending, is it spent on coffee and the meal out or is it social events and stuff you need to spend on?
If you can split it down you know what you can eliminate and still feel like you are living a life.
What you have left is the savings.
The savings are the important bit
What is the cost of 1% higher interest how high would interest rates need to move until you can't cover the cost.

And you mother will be part owner of the home you live in. If she was to run up a large personal debt what is the amount you will owe her estate to remain in the house?

Good luck in the numbers I hope they work out

That seems quite a lot of money for extras. Much more than many people have left over at the end of the month. But it's hard to say how far that would go in your country. You need to work out a budget and look at how much you spend monthly.
However if it is your dream house and if can afford it even if it means tightening your belt a little then you should buy it. Otherwise you may regret it. I still regret not buying a bigger house 30+ years ago

@SolasAnla wow really insightful comment thank you! Do you mean her estate as in once she passed away or while she is living?

Yes, we are going 50/50 on the house. 50% will be owned by my mum, 50% owned by my husband and i

@Nonnymum thank you so much! My gut and my heart say to go for it, as I know we will be so happy there.

You need to work out your calculations in much more detail. Some questions to think about below...

Q: How much of a % will be your repayment of your post tax income? More than 30% is not livable
Q: What's your split % of spend of post tax income? I use barefoot investor "buckets"
Q: What will happen with the inevitable rate rise?
Q: How large is your emergency fund? (I have 3, 1. emergency works to my property, 2. health fund just in case 3. 6 months salary)
Q: COVID is increasing prices across the board. Can you cover hikes to groceries, power, etc?
Q: Do you have kids or are you planning kids? If planning kids, how will you manage during maternity leave?

For context, I'm in Melbourne and own a 2 bedroom inner city townhouse on a mid 6 figure income. Pre tax I salary sacrifice into my super 8% of my pre-tax income.

My bills (including mortgage repayment, gym, water, power, rates, internet, etc) represents 25% of my post tax income. I save 40% of my income. 15% of my income is fun money. 10% goes into an emergency fund. 10% goes into a holiday fund.

*With recent increases to food and other bills, I'm currently reworking my % split to life bills up to 30%.

Hi, please also think about what would happen in the event if you were to pass away before your mum. Obviously that hopefully won't happen! Just something you also need to consider.

Would your husband want to sell? What if he was to meet someone else?

Sorry for being morbid, but you do need to consider every possibility.

@snowstorm2012 we have thought about and talked about those situations. Also consulting with lawyers about all the finer details. My life insurance would pay out pretty much the balance of our mortgage, and they would sell the house and take their share out of it to buy seperate places

Ah fair enough! I always hate bringing stuff like this up but it's just reality and so many people don't discuss things like this because they either don't want to or 'it would never happen'.

Best of luck to you whatever you decide 👍🏼

[quote Kiwiinparis]@SolasAnla wow really insightful comment thank you! Do you mean her estate as in once she passed away or while she is living?

Yes, we are going 50/50 on the house. 50% will be owned by my mum, 50% owned by my husband and i[/quote]
Both.
In theory if she had a debt and was taken to court the Court could order the home sold. You get your 50% of the sale price profit and the person owed gets your mother's 50%.
Same principle if she has availed of a state loan for a care home etc.
On death, do you and her current teen age son become co-owner of her 50%?
So you need to estate plan with your mother today as to how that is resolved.

Who is making the bulk of the repayments is this 50/50 too?
What happeneds with cash improvements which add value to the property etc.

She is also taking a risk as 25% is "yours" 25% your DH's with "your 25%" transferring to him on your death. Which could be before your mum's then what happens if he was in a new relationship...

PS has your DH lived with your mum and The Teenager yet / have they lived with him😉?