Backyard Blitz

Hi Barefoot,

My husband works full time on his own business and I am a stay-at-home mum to three kids. We recently finished building a unit in our backyard and we have not subdivided yet, so they are on the one title. The back unit we own outright, and we owe $160k on the one we are living in. Hubby wants to rent both out and hope the bank will lend us enough money to buy our dream home. I cannot help thinking maybe we would be better selling both properties and living debt free. What do you think?

Lucy

Hi Lucy,

First, the statement ‘the back unit we own outright’ is irrelevant, because if they are on the same title the bank will hold both as security. Second (even though I don’t know the value of the units), your hubby’s plan sounds … terrible. You’d be living in a home with a big mortgage while renting out two units with only $160k owed. I agree with you. Sell, use the proceeds to buy your dream home, and live debt free.

Scott