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Tiny houses: Downsizing to avoid a mortgage

Patricia Babalis avatar
Patricia Babalis
- 3 min read
Tiny houses: Downsizing to avoid a mortgage

There’s been lots of buzz surrounding tiny houses since they first came onto the scene as a substitute to traditional housing.

Far from just being about a place to live, owners of tiny houses look at their lifestyle as a social movement providing an alternative to massive mortgages and environmentally unfriendly homes.

In Australia, the amount of people living in actual tiny houses isn’t recorded but it’s considered a fairly small movement. Still, some die-hard devotees to the tiny lifestyle are living out their dreams in transportable homes around the country. In fact, there’s even a tiny house listed on Airbnb.com.au if you want to try out tiny living for yourself.

Although just looking at one is enough to make you feel a little bit claustrophobic, if you were considering a tiny change here are some of the advantages and disadvantages to consider.

What are the advantages?

Cheap

The main reason why people choose to go for a tiny house over a normal house is the cost. It’s a way of buying somewhere to live that most people can afford upfront. Securing housing without the lifelong mortgage can free up your money to go towards other investments and experiences such as travel. The reduced size of the property will also reduce other bills, such as water and electricity, bringing down living costs even further.

Transportable

Tiny houses are built onto trailers that can be attached to vehicles and taken around with you wherever you may need to go. In theory this is great but in practice there are lots of rules about where you can park your tiny house and start living in Australia. If you’re interested in finding out where you can actually place a tiny house it may be worth enquiring with the local council in the area you wish to live.

What are the disadvantages?

Literally tiny

This may seem obvious but these houses are literally tiny. You will not have living space, you will not be able to have friends over to entertain and you will most definitely have to throw out your furniture and many of your possessions. This is where the tiny house as a lifestyle really comes into play. Unless you’re committed to the decluttering, minimalist philosophies of the tiny way you will not be happy in one of these houses – no matter how cheap it is.

Not an investment

Property is the nation’s favourite investment with many Australian’s favouring the stability and tangibility of putting their money into the property market. If you’re considering a tiny house, then it’s important to know that this is not an investment in the way that even a “tiny” apartment is. Your chances for reselling your tiny house for more than you bought it for ten years from now are virtually non-existent. This is of course not an issue if you are investing your money in other ways, contributing to super and still saving but keep in mind that if you need to move out of your tiny house in future, potentially when you’re older and need a home that is easier to navigate or if your family expands, you won’t be able to trade the tiny house in for a stack of cash. 

Disclaimer

This article is over two years old, last updated on August 26, 2016. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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