It’s a bad time to sell but a good time to save

QMy partner and I are looking to purchase our next property together in Melbourne with a budget of around $1 million but have had great debate on the best way to do it.

We each have our own investment properties. She has a two-bedroom, one-bathroom, one-garage unit/villa in Melbourne worth about $500,000 with a $400,000 mortgage and I have a two-bedroom, one-bathroom, one-garage apartment in Sydney worth $600,000 with a $450,000 mortgage.

I have suggested that we both sell our individual properties so we have enough deposit to avoid lenders mortgage insurance (LMI). She has a view that her property has more growth potential and has suggested that only I sell my property and we pay the LMI as she believes the rate of growth for the property will exceed the cost of LMI. To find a middle ground, I’ve suggested that we save for a year or two, then take out the equity on both our properties and pay the LMI (should we need to). Thoughts?

I am always a little terrified to step into the world of couples and money, Brendan. However,

I will don my bulletproof vest and helmet and wade in.

Technically, who should sell their property is pretty easy and based on the one with the lower growth potential. Capital gains tax on either sale also comes into play. The reality, though, is a lot of emotion, which can involve who brings what into a relationship. This involves a mature conversation and possibly a glass of red wine.

The next bit is easier for both partners to digest. As you are both fully aware, the market is very weak in most parts of Australia and most likely to fall further. This is not the time to be selling but a great time to save like crazy, as for the first time in a decade savers are gaining on property owners. This weakness, I believe, will continue for some time.

So given it is a bad time to sell and a great time to save, why not go with that for now, continue to openly discuss money and turn your personal goals into joint goals. Having different money personalities is a certainty. That is not an issue; communication is the solution and will strengthen your relationship

I do wish you all the best with your relationship and your money plans.