The new Netlfix reality series, Marriage or Mortgage focuses on two of life’s crucial decisions: “When should I buy a house and when should I get married?”. In this report, we’ll look at why yound couples in Southeast Queensland are deciding to build homes before they get married. We’ll also show you how to compare the cost of a house and a wedding by creating a simple budget. Finally, we’ll give you some quick tips to save cash on your marriage and mortgage.
How to Budget
Tim and his fiancé Katy are starting a new life in Brisbane. They want to get married and build a home together, but they’re not sure if they can afford everything at once. To solve this dilemma, they will need to work out a budget. Let’s see what they have so far:
Tim and Katy have decided to build a brand new home. They would like to pay it off over 20 years. After speaking with their building broker, they know the best price they can get for their new home from the best builder. They now estimate spending $550,000 on their new home.
The green $2,500 beside “Construction Loan Repayments” in the table below is how much Tim and Katy plan to repay on their construction loan each month. Luckily, interest rates on property loans tend to be low, at around 2-5% per annum.
|PERSONAL MONTHLY BUDGET: TIM AND KATY
|Tim’s Income (Monthly)
|Katy’s Income (Monthly)
|Construction Loan Repayments
|Electricity & Water
|Wedding Repayments (Over 18 Months)
|Venue and Photography
Tim and Katy shopped around online and estimate their wedding will cost $36,000. They’ve realised that if they want to get married in 2021, they need to take out a wedding loan. The amounts in gold are amounts Tim and Katy want to repay on this loan every month. This loan will take 18 months to pay off.
Typically, a wedding loan is much shorter than a construction loan or mortgage. The repayments are also smaller. However, interest rates on wedding loans loans range anywhere from 6-19% per annum; short-term loans can be expensive.
Tim and Katy only have $100 per month left after crunching the numbers. We think this budget is a little tight. To feel confident, give your budget a “buffer zone”. This means you should plan to spend less than you’re able to, just in case things change in the future.
It looks like Tim and Katy would struggle to afford paying off their wedding and home at once. They must tweak their budget to make things work better. As we will explain in the following section, it’s a good idea to start building your house first before you pay for your wedding.
Reasons to Build First
Trying to build a house after an expensive wedding is like trying to fit seconds in after a big dinner; it can be done, but you won’t enjoy it very much. Here’s why savvy Australians are choosing to buy a place together before they get married:
You appreciate your other half more than anyone, but your house is going to appreciate more than anything! While you repay a mortgage or construction loan, your house will probably increase in value. This means your repayments are actually investments.
Apart from some leftover cake and endless photos, there won’t be any assets for Tim and Katy to take home after their wedding. Everything they spend on the day will enrich their memories, not their bank account.
The sooner you start investing in property, the better your future will look. You might even feel more comfortable with the cost of your wedding once you confidently own your own home.
No More Rent!
Housing costs don’t disappear if you don’t build. “Marriage or mortgage?” is just as important to ask as “mortgage or rent?” The average renter in Brisbane will pay around $450 per week, so if you’ve been paying for 5 years, you will have spent $117,000.
This rent money could be going straight into your new home instead! The sooner you can turn rent money into invested money, the better.
When you decide to buy a block of land, house or castle, you’ll have to pay a big amount up front. This down payment will come from your personal savings, so it’s good to start building when your cash flow is healthy.
When you get married, no down payment is required. You decide how much you want to spend and when you want to spend it. You’ll have a clearer picture of what you can afford with your wedding after sorting out the down payment on your home loan first.
Time to Adjust
A property loan will be a long-term expense. If your loan repayments are more than your rent used to be, it might take some time to adjust to some new expenses you may have (different transport coast, different maintenance costs, etc.).
Your new home will need a new budget. Many couples prefer taking some time to settle in together before getting married. You might find it easier to budget your wedding once you know how much your adjusted living expenses are.
Peace at Home
Best of all, you get to sleep in your new place when you tie the knot! No more landlords. No more housemates. All of the stress will be gone as soon as you say “I do”.
Reasons to get Married First
When you and your partner apply for a mortgage, you can apply for joint tenancy or to be tenants in common before being married. This means the law will consider you a married couple, even if you’re not. Even so, here are some reasons why many still choose to get married first:
Since prehistoric times, cave men and cave women would first get married before buying a new cave together. The tradition of marriage is sacred, so maybe you’ll feel more comfortable having your wedding first. If it’s part of your religion or culture to get married before buying a home, why change?
If you’re a couple planning on moving interstate or overseas, you’ll probably want to have your wedding before you leave. Your friends and family will find it hard to relocate for a wedding, but you can build your house anywhere you want.
Our last reason to get married first is if you don’t think you can afford a home yet. Love doesn’t have to wait, especially if you’re considering hosting a wedding on a budget. You may be surprised, however, by how affordable it can be to build a new one. We advise chatting with a building broker to get a better idea.
Tips for Saving
You may feel a little overwhelmed by all the talk of budgets and expenses. To help you decide between a marriage or mortgage, here are some strategies you can use to save money on your home and wedding without compromising on quality:
Tip 1 – Consider Building Your First Home
Building your first home soon is a great way to cash in to government rebates like the New Home Builder Grant, which is worth $15,000!. You can get this grant if you have signed your build contract by March 31. Click here to learn how to apply.
What’s more, building a customisable home will allow you to your own unique place. When it comes to design, the sky is the limit!
Tip 2 – Say no to “The Gram”
Added social pressures around “Instragrammable” events can drive up your wedding costs. A survey by The Knot Social Media says that 62% of couples increase their social media use after getting engaged. If you’re looking to save on your wedding, consider this statement by Erin Lowry about the Marriage or Mortgage TV Show:
Focusing only on what you and your partner want for each other at your wedding can be tough. It’s empowering to reduce the influence Instragram has over your wedding and your wallet. Also remember that a comfortable, beautiful living space will receive a real-world “like” from everyone who steps inside.
Going it alone is impossible in love and extremely tricky in building. Your uncles, niece and nan may all have conflicting advice about your house or wedding. Sometimes, its better to leave things to the experts…
At Buildi, we specialise in helping you build a home the hassle free way. We take your requests to market so that builders bid for your business. Then, we work with your selected builder to ensure service levels are met and everything stays on schedule. If you team up with us, you could save thousands. Contact us today for a free consultation.