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rockola57

Are house prices set to tumble in Oz?

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I was watching the news about a week ago and there was a report in depth about the artificially inflated house prices here,and how the bubble will burst soon as it is not sustainable!What do you think?I hope it does,from a purely selfish angle,so i can get a house!

Cannot afford to buy and live a decent life here at the moment,i prefer the latter at present!!!!:wink::goofy:

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I was watching the news about a week ago and there was a report in depth about the artificially inflated house prices here,and how the bubble will burst soon as it is not sustainable!What do you think?I hope it does,from a purely selfish angle,so i can get a house!

Cannot afford to buy and live a decent life here at the moment,i prefer the latter at present!!!!:wink::goofy:

Have you ever thought of an interest only mortgage mate?


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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Have you ever thought of an interest only mortgage mate?

 

Yessum Pabs,today as it 'appens!Did a mortgage repayment calculator assessment with Nab,and it did become appealing after seeing how much it costs to go down the conventional route!::huh:

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Yessum Pabs,today as it 'appens!Did a mortgage repayment calculator assessment with Nab,and it did become appealing after seeing how much it costs to go down the conventional route!::huh:

Thats the way im thinking rock,we only want our own place because we(well i moreso!)dont like the thought of living in someone elses hse.

At the same time were not buying purely to make $,so if we buy on interest only i "doubt" it will have lost money over 10/15 yrs,by which time we may well come back here to peg out,depending whether we've got family around us or not by that time in oz?

IE if i peg out in oz and my nephews or jans nephews/ nieces arent over there i cant see jan staying there on her own mate,plus in future yrs we will have a decent amount of money thru bereavement etc,hopefully thats a long way off tho!

So im thinking like you,why live on egg on toast for 10/15 yrs to have a hse(exagerating a bit!),when i could get an interest only(hopefully)and have more disposable income?

Saying all that,im NO expert on the whys and wherefores of mortgages,im sure someone will be along soon to throw a big hand grenade on my idea!:wideeyed::biglaugh:


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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I was watching the news about a week ago and there was a report in depth about the artificially inflated house prices here,and how the bubble will burst soon as it is not sustainable!What do you think?I hope it does,from a purely selfish angle,so i can get a house!

Cannot afford to buy and live a decent life here at the moment,i prefer the latter at present!!!!:wink::goofy:

 

 

 

I suggest you read this: [ATTACH]2428[/ATTACH]

 

 

Very interesting read indeed.

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Have you ever thought of an interest only mortgage mate?

 

What's this Pablo?

 

I guess we will be buying a house in OZ in about a year if all goes well.....we don't like renting and its nice to have your own house.

 

Cheers

B!K3R

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What's this Pablo?

 

I guess we will be buying a house in OZ in about a year if all goes well.....we don't like renting and its nice to have your own house.

 

Cheers

B!K3R

 

 

Well like i say mate im NO expert,but im on interest only now due to the work situation and my payments are half of the full repayment mortgage.

Its just a short term plan for when we get to oz untill such times as we come into some money,then we might look at it again?,because like i say were not buying a hse as an investment as such,were buying purely because were used to having our own home.

BUT there WILL be cons on this mate,because i "imagine" if were not paying off the hse itself,just the interest then long term a repayment might(probably is!)be better.

Its just on first moving to oz,setting up etc,the less outgoings i have "initially" the better,as i said before,inyrs to come we will have inheritance etc and then we might look at it again mate?

I was thinking of putting a thread on tbh,asking one of the mortgage/financial advisors for some guidance?

In your case,an interest only mortgage might suit because i dont think you've sold your hse yet? so maybe go on interest only,then review when you sell in europe?

Btw we havnt sold ours yet either,but were not going untill we do sell,you are i believe?

Im just thinking out loud tbh mate,im no expert as i say!!


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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From a purely personal point of view I would say if you cannot afford a repayment mortgage that say has repayments at 30% of your monthly income (if you pay monthly) then I wouldnt bother. I loved that white paper that was linked to earlier and agree with basically everything in it.

 

Personally I feel there's a bubble in aus and it;s going to be a heck of a crash. Buying a house is about affordability and nothing more. Interest rates are still below the mean they normally sit at. Which is another consideration. If you stretch yourself on an interest only mortgage at a reasonably low (compared to average) interest rate, can you afford the repayments if the interest rates go up to their long term average? I'd personally want to have that repayment amount (for a repayment mortgage) calculated for the average interest rate and set that as my 30% barrier for 'mortgage stress'.

 

Like that white paper states, renting is not dead money. You're paying for a service to have a roof over your head. Mortgages are exactly the same, you just get to decorate the place as you see fit and don't get the hassle of dealign with agencies etc. But with a purchased property at todays prices you need to still maintain your property if something goes wrong with it, with a rented property, if your boiler breaks then you call up to get it repaired and not out of your own pocket either. Again, as that white paper states. What are interest payments on a mortgage if not dead money?

 

This will be basic and more so than the white paper but what if your mortgage payments are say $1000 a fortnight more than your current rental? If you'd rented for say those 25yrs and stuck that $1000 into the bank, without interest at the end of the 25yrs you'd have $525,000. Ok, if you'd had a mortgage you'd have paid off your house (if it was a repayment mortgage) and then you have a decision to make. Have I saved enough to retire on? Do I need to downgrade my house I spent so much time and money on getting when I was younger? Am I in a property bubble or at a bottom of the market so my capital gains are actually minimal and I could have had that $525k (which was a figure with no interest added onto it either) and have invested that up and built up a nice nest egg to buy a small place to retire into and give me some cash left over to enjoy that retirement.

 

Basically, you need to work out if buying is right for you and if it's affordable more than anything. We are all programmed by society that we need to own our own house. But don't break yourself in doing so.

 

Sorry for the waffle but I feel strongly on this subject even though I am an evil banker myself lol

 

Also, just for note I will reiterate I can waffle especially after a night on the ciders!!! hehe :D

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From a purely personal point of view I would say if you cannot afford a repayment mortgage that say has repayments at 30% of your monthly income (if you pay monthly) then I wouldnt bother. I loved that white paper that was linked to earlier and agree with basically everything in it.

 

Personally I feel there's a bubble in aus and it;s going to be a heck of a crash. Buying a house is about affordability and nothing more. Interest rates are still below the mean they normally sit at. Which is another consideration. If you stretch yourself on an interest only mortgage at a reasonably low (compared to average) interest rate, can you afford the repayments if the interest rates go up to their long term average? I'd personally want to have that repayment amount (for a repayment mortgage) calculated for the average interest rate and set that as my 30% barrier for 'mortgage stress'.

 

Like that white paper states, renting is not dead money. You're paying for a service to have a roof over your head. Mortgages are exactly the same, you just get to decorate the place as you see fit and don't get the hassle of dealign with agencies etc. But with a purchased property at todays prices you need to still maintain your property if something goes wrong with it, with a rented property, if your boiler breaks then you call up to get it repaired and not out of your own pocket either. Again, as that white paper states. What are interest payments on a mortgage if not dead money?

 

This will be basic and more so than the white paper but what if your mortgage payments are say $1000 a fortnight more than your current rental? If you'd rented for say those 25yrs and stuck that $1000 into the bank, without interest at the end of the 25yrs you'd have $525,000. Ok, if you'd had a mortgage you'd have paid off your house (if it was a repayment mortgage) and then you have a decision to make. Have I saved enough to retire on? Do I need to downgrade my house I spent so much time and money on getting when I was younger? Am I in a property bubble or at a bottom of the market so my capital gains are actually minimal and I could have had that $525k (which was a figure with no interest added onto it either) and have invested that up and built up a nice nest egg to buy a small place to retire into and give me some cash left over to enjoy that retirement.

 

Basically, you need to work out if buying is right for you and if it's affordable more than anything. We are all programmed by society that we need to own our own house. But don't break yourself in doing so.

 

Sorry for the waffle but I feel strongly on this subject even though I am an evil banker myself lol

 

Also, just for note I will reiterate I can waffle especially after a night on the ciders!!! hehe :D

 

 

Well if your a banker you know a hundred times more than me so i wont argue re finances etc.

I agree we are programmed to buy,ive worked in germany/holland were there seems to be much less inclination to buy,but i was basically arguing the same point as you are re renting with somebody on here the other day,and they pointed out the obvious....IE i would allways be paying out X amount on rent,in fact rising over the yrs,as opposed to buying where the repayments are falling as time goes on?

All i know is my heads wrecked debating what to do,its easier to decide if your well up on finance as i assume you are.

Also its difficult to really assess untill were earning over there? i would say a realistic estimate of our earnings over there would be about $9.000 a month maybe,hopefully more if i go on what people are telling me(bricklayer+accounts clerk)but i dont want to get ahead of myself,so say $9.000,but at 48 yrs of age i'd have less than the normal 25 yr mortgage,as i say...dilemma! no doubt i wont solve it untill im in oz,i HOPE!


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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I just say Im an evil banker... though I just actually program the risk systems. So if you've seen little britain and see the 'computer says no' sketch. I program the computer to say yes, no and how much basically =P

So not as on the ball as a financial advisor would be and they'd be much more qualified to say what's right compared to me. That was more my own personal opinion from what I see getting asked to be programmed into these and collection systems.

 

From what I remember about mortgages, your repayment figure doesnt actually ever go down. Well, unless you're on some sort of tracker and the interest rate drops maybe. But the amount you pay generally remains the same the life of the mortgage. Nearer the end of the mortgage the proportion of that payment is more geared towards repayment capital rather than interest. At the start of the mortgage the bulk of the payment is in interest along rather than paying into the capital.

 

I wouldnt say it's easier to decide if you're up on finance either lol. Sometimes to much information gives you too many variables to think about. Hence why I now just go by the simple thing of affordability. Will the payments mean Im paying more than 30% of my net income on rent/mortgage. If yes, then that place isnt affordable for me and I need to live within my means more. Not an easy thing to do in this society where we need the latest gadgets, plasmas, cars etc. Dont get me wrong, I wouldnt be without my plasma tv though lol ;)

 

To be honest, in your situation. I'd personally say rent, get settled in and when you're ready to buy go see an independant financial advisor who should be able to break it all down simply enough. I know when I think about buying I'll do the same myself. No harm in independant advice at all.

 

Again, this part is pure personal opinion and nothing more. I'd give the market a couple of years anyway. As if mortgage stress starts hitting these things take time to really manifest themselves and if we do see a crash I'd defo expect it in the next couple of years. Then if it does you havent lost anything but gained due to falling prices.

 

Also, I'm not normally a doom monger. I was totally the oposite when in the uk. I was very vocal against falling house prices and though it could be said having seen it go that way that's how I am leangng here I could understand. But I see far too many similarities with the affordability that I saw back home and Im pretty sure any independant advisor would say dont over stretch yourself. Make sure you can cover off rising interest rates.

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Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

 

This calculator is a good one to use in the rent or buy debate.

 

Coming form Ireland I have to say I am hearing the same noises( ie we will get a soft landing etc) in the Aus press that we heard here approx 3 years ago.

 

Look what happened our housing market - down 50% and back to 2001 levels.

 

I do no think that the Aus bubble will burst that much but looking at the affordability of buying ( cost of house approx 7 times income) it is certainly in for an adjustment.

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I just say Im an evil banker... though I just actually program the risk systems. So if you've seen little britain and see the 'computer says no' sketch. I program the computer to say yes, no and how much basically =P

So not as on the ball as a financial advisor would be and they'd be much more qualified to say what's right compared to me. That was more my own personal opinion from what I see getting asked to be programmed into these and collection systems.

 

From what I remember about mortgages, your repayment figure doesnt actually ever go down. Well, unless you're on some sort of tracker and the interest rate drops maybe. But the amount you pay generally remains the same the life of the mortgage. Nearer the end of the mortgage the proportion of that payment is more geared towards repayment capital rather than interest. At the start of the mortgage the bulk of the payment is in interest along rather than paying into the capital.

 

I wouldnt say it's easier to decide if you're up on finance either lol. Sometimes to much information gives you too many variables to think about. Hence why I now just go by the simple thing of affordability. Will the payments mean Im paying more than 30% of my net income on rent/mortgage. If yes, then that place isnt affordable for me and I need to live within my means more. Not an easy thing to do in this society where we need the latest gadgets, plasmas, cars etc. Dont get me wrong, I wouldnt be without my plasma tv though lol ;)

 

To be honest, in your situation. I'd personally say rent, get settled in and when you're ready to buy go see an independant financial advisor who should be able to break it all down simply enough. I know when I think about buying I'll do the same myself. No harm in independant advice at all.

 

Again, this part is pure personal opinion and nothing more. I'd give the market a couple of years anyway. As if mortgage stress starts hitting these things take time to really manifest themselves and if we do see a crash I'd defo expect it in the next couple of years. Then if it does you havent lost anything but gained due to falling prices.

 

Also, I'm not normally a doom monger. I was totally the oposite when in the uk. I was very vocal against falling house prices and though it could be said having seen it go that way that's how I am leangng here I could understand. But I see far too many similarities with the affordability that I saw back home and Im pretty sure any independant advisor would say dont over stretch yourself. Make sure you can cover off rising interest rates.

 

 

I think the other side of the coin,IE what the other person i was debating this with was saying is this....in 10/15 yrs time i could in theory be paying £700/800(or more!) a week in rent whereas if i'd bought i would probably be paying "roughly" what i started out paying when i initially took out a mortgage,and tbh that sounds about right.

 

But anyway cheers for that mush:wubclub:


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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None of it will matter if hse prices keep going the way they are here anyway,all i'l have left for a deposit is thirty bob and a bar of highland toffee.....renting it is then initially!:biglaugh:


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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I think the other side of the coin,IE what the other person i was debating this with was saying is this....in 10/15 yrs time i could in theory be paying £700/800(or more!) a week in rent whereas if i'd bought i would probably be paying "roughly" what i started out paying when i initially took out a mortgage,and tbh that sounds about right.

 

But anyway cheers for that mush:wubclub:

 

I highly doubt rent would be that much more than a mortgage, but again, nothing to back that up, just opinion which is probably worthless lol

and as well, in 10/15yrs time if you'd been diligent enough to put the money difference into investments you'd be earning interest that would close any gap.

 

I do like the website link that was posted above, but that does have a few flaws if you ask me. It has a static house price and rental price fluctuation. Such as house price will increase over the time of the mortgage. No hint of any variations. As you're feeling in t he uk, prices have dropped no doubt and it will be a while before they recover again.

 

It's a thoroughy interesting debate though :D

 

And quite frankly, nothing at all wrong with highland toffee! hmmmmm

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Well I might as well stick my 2p's worth in then lol :rolleyes:

 

I very much believe in 'owning' your home. Being able to completely redecorate and do what you like with it makes it your own home. Yes some rented places let you re-decorate but we stripped all the wall paper, dh plastered all the walls and we have (nearly) got it just how we like it. And we are not spending money on something that is going to line someone elses pockets. However, it needs to be done in a sensible way. ie making sure not only can you afford the mortgage but its best not to stretch yourself and leave room so that you can still afford the repayments if rates were to go up.

 

We bought our flat 4 1/2 years ago and we had a plan. We bought a large 2 bed flat, we stretched ourselves as far as we could without pushing ourselves to the limit but bought a big enough place so that if things got difficult and we couldnt afford to move somewhere bigger we could be happy here for a long time and also start a fmaily here. Our mortgage is about £100 more than it was than we started which is still affordable and its still only slightly more expensive than it would be to rent a one bed flat. It is an interest only mortgage however, but the plan was to get on the property ladder and then switch to replayment when we could afford it. Which in our eyes was definitely the right thing as we could never get on the property ladder now. If we werent migrating to Oz then that time would be now. However, the plan has changed slighlty to rent this place out, start renting in Oz and then once we're settled hopefully buy something there after a year or two when we've saved some money (will go with some savings aswell to start us off). We will rent the flat in the UK and keep it as an investment for the future (we can cover our mortgage with rent comfortably). We already have some equity in the flat despite the market crashing, maybe only £10,000/15,000 but that's still money we wouldnt have made if we were renting. If our plans dont work out and we need to sell the flat at some point then a) hopefully it will be to help us buy something in Oz and b) thank goodness we had the flat to sell when we needed some money.

 

In my eyes owning a property is a great thing but only if you are in it for the long haul because property will always be worth more in time but that might be a long time.

 

My parents have always owned somewhere, done work on it and then moved somewhere a bit bigger etc. They both still own properties now, live comfortable lives (despite splitting the assets when divorcing) and my dad at age 67 has just sold a 1 bed flat he owns out right towards his retirement, happy days. It has been a struggle at times for them but lifes always a struggle in one way or another and I really feel that planning for the future is important,I really dont want to be skint when I retire :cry:. If you've got the disciplne to save up what you would have spent on mortgage well then great but I feel that if you are in it for the long haul then you will never lose on property in the end and there is a high chance it will pay off nicely if you make the right decisions along the way :smile:

 

Sorry for the long rant but I felt that there was mostly negative info on here about owning a propery so wanted to put the other side forward. Loads more I could say but decided not to really over do it....... :biglaugh: :eek:

 

Thanks for listening

 

Cara :wubclub:


23/11/10 AQF III Certificate received. Positive TRA Skills Assessment 22/12/10 State sponsorship accepted 16/3/11 Visa applied 25/3 CO 20/4 meds booked 25/5 Visa granted 15/6/11 Woo Hoo! validated 22/9/11 Was AMAZING! Hope to move to Perth end Oct 2012 :smile:

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In your case,an interest only mortgage might suit because i dont think you've sold your hse yet? so maybe go on interest only,then review when you sell in europe? Btw we havnt sold ours yet either,but were not going untill we do sell,you are i believe?

Im just thinking out loud tbh mate,im no expert as i say!!

 

Oh i c, thanks mate. Yes, we have not sold our house, tbo, we haven't even tried cause the market is so bad and exchange rate too....so we'll just rent it for now.

 

We'll see ;)

 

Cheers

B!K3R

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House prices well they have not decreased that much yet and I have been expecting it for years now. With the demand from immigration it has supported the housing sector and kept prices high. Investment in property after the stock market crash, goes in swings and roundabouts.

 

I think outer areas of new housing suffer falls due to the competition from ongoing building and people over stretching their budget, new furniture, car and rising energy costs.

 

If I was to buy another house it would have to be smaller than the one I now live in, energy efficient and close to amenities, ie everyone else is looking for that so prices remain stable if not a bit higher.

 

Never take the extra money offered for carpet, furniture etc on a mortgage. Cannot eat them or be entertained by them.


Petals

:ssign15:taking no prisoners :wink:

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Guest chris955

Prices HAVE to fall as they are ridiculous at the moment, we certainly couldnt afford the house we are in now if we had to buy today. We got a flyer in the mailbox yesterday that says prices are set to RISE 15% in Brisbane in the next couple of years and even higher in some capital cities. I would never ever rent again though, just money down the drain but for many it is a necessity.

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Guest burgledad
I just say Im an evil banker... though I just actually program the risk systems. So if you've seen little britain and see the 'computer says no' sketch. I program the computer to say yes, no and how much basically =P

So not as on the ball as a financial advisor would be and they'd be much more qualified to say what's right compared to me. That was more my own personal opinion from what I see getting asked to be programmed into these and collection systems.

 

From what I remember about mortgages, your repayment figure doesnt actually ever go down. Well, unless you're on some sort of tracker and the interest rate drops maybe. But the amount you pay generally remains the same the life of the mortgage. Nearer the end of the mortgage the proportion of that payment is more geared towards repayment capital rather than interest. At the start of the mortgage the bulk of the payment is in interest along rather than paying into the capital.

 

I wouldnt say it's easier to decide if you're up on finance either lol. Sometimes to much information gives you too many variables to think about. Hence why I now just go by the simple thing of affordability. Will the payments mean Im paying more than 30% of my net income on rent/mortgage. If yes, then that place isnt affordable for me and I need to live within my means more. Not an easy thing to do in this society where we need the latest gadgets, plasmas, cars etc. Dont get me wrong, I wouldnt be without my plasma tv though lol ;)

 

To be honest, in your situation. I'd personally say rent, get settled in and when you're ready to buy go see an independant financial advisor who should be able to break it all down simply enough. I know when I think about buying I'll do the same myself. No harm in independant advice at all.

 

Again, this part is pure personal opinion and nothing more. I'd give the market a couple of years anyway. As if mortgage stress starts hitting these things take time to really manifest themselves and if we do see a crash I'd defo expect it in the next couple of years. Then if it does you havent lost anything but gained due to falling prices.

 

Also, I'm not normally a doom monger. I was totally the oposite when in the uk. I was very vocal against falling house prices and though it could be said having seen it go that way that's how I am leangng here I could understand. But I see far too many similarities with the affordability that I saw back home and Im pretty sure any independant advisor would say dont over stretch yourself. Make sure you can cover off rising interest rates.

Heading down under soon. We plan to rent, at least until we know the market and the Perth suburbs. Probably a good thing if a crash is on its way. Mind you, they've been saying this for 3 years.

Not sure if we will sell up in UK or rent our house out. Keeping a mortgaged property in UK is advised by others because if you return and don't have a house it is very difficult to get a mortgage. If we do this, we won't have a deposit for a house in Aus.

 

Mortgage payments drop with the capital because you only pay interest on what you owe. So, if you pay chunks off the capital, your payments go down. Interest payments is dead money.

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Thats the way im thinking rock,we only want our own place because we(well i moreso!)dont like the thought of living in someone elses hse.

At the same time were not buying purely to make $,so if we buy on interest only i "doubt" it will have lost money over 10/15 yrs,by which time we may well come back here to peg out,depending whether we've got family around us or not by that time in oz?

IE if i peg out in oz and my nephews or jans nephews/ nieces arent over there i cant see jan staying there on her own mate,plus in future yrs we will have a decent amount of money thru bereavement etc,hopefully thats a long way off tho!

So im thinking like you,why live on egg on toast for 10/15 yrs to have a hse(exagerating a bit!),when i could get an interest only(hopefully)and have more disposable income?

Saying all that,im NO expert on the whys and wherefores of mortgages,im sure someone will be along soon to throw a big hand grenade on my idea!:wideeyed::biglaugh:

Great post Pabs,youre dead right IMO.This is the way we are thinking,as we dont expect to make much,and don,t want to end our days in OZ.Just somewhere to live without answering to Landlords,cant hang a picture up without asking,and then filling hole in when yer go,then they say you can see where the hole was,so paint the whole wall,and all that kind of nonsense.Better off doing it like you say.:biggrin:

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From a purely personal point of view I would say if you cannot afford a repayment mortgage that say has repayments at 30% of your monthly income (if you pay monthly) then I wouldnt bother. I loved that white paper that was linked to earlier and agree with basically everything in it.

 

Personally I feel there's a bubble in aus and it;s going to be a heck of a crash. Buying a house is about affordability and nothing more. Interest rates are still below the mean they normally sit at. Which is another consideration. If you stretch yourself on an interest only mortgage at a reasonably low (compared to average) interest rate, can you afford the repayments if the interest rates go up to their long term average? I'd personally want to have that repayment amount (for a repayment mortgage) calculated for the average interest rate and set that as my 30% barrier for 'mortgage stress'.

 

Like that white paper states, renting is not dead money. You're paying for a service to have a roof over your head. Mortgages are exactly the same, you just get to decorate the place as you see fit and don't get the hassle of dealign with agencies etc. But with a purchased property at todays prices you need to still maintain your property if something goes wrong with it, with a rented property, if your boiler breaks then you call up to get it repaired and not out of your own pocket either. Again, as that white paper states. What are interest payments on a mortgage if not dead money?

 

This will be basic and more so than the white paper but what if your mortgage payments are say $1000 a fortnight more than your current rental? If you'd rented for say those 25yrs and stuck that $1000 into the bank, without interest at the end of the 25yrs you'd have $525,000. Ok, if you'd had a mortgage you'd have paid off your house (if it was a repayment mortgage) and then you have a decision to make. Have I saved enough to retire on? Do I need to downgrade my house I spent so much time and money on getting when I was younger? Am I in a property bubble or at a bottom of the market so my capital gains are actually minimal and I could have had that $525k (which was a figure with no interest added onto it either) and have invested that up and built up a nice nest egg to buy a small place to retire into and give me some cash left over to enjoy that retirement.

 

Basically, you need to work out if buying is right for you and if it's affordable more than anything. We are all programmed by society that we need to own our own house. But don't break yourself in doing so.

 

 

Sorry for the waffle but I feel strongly on this subject even though I am an evil banker myself lol

 

Also, just for note I will reiterate I can waffle especially after a night on the ciders!!! hehe :D

 

 

 

 

Excellent post carpetbelly, agree with everything you said.

 

Good old fashioned saving is one of the best ways to invest for your retirement.

 

 

 

Personally, I stay away from interest only mortgages. I would constantly worry about what if I couldn't pay for the house at the end of the mortgage term for example.

Paying interest can be viewed just as dead money as paying rent (as some would say), unless you can save at the same time or invest money elsewhere, but then may as well have a repayment mortgage.

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We bought our flat 4 1/2 years ago and we had a plan. We bought a large 2 bed flat, we stretched ourselves as far as we could without pushing ourselves to the limit but bought a big enough place so that if things got difficult and we couldnt afford to move somewhere bigger we could be happy here for a long time and also start a fmaily here. Our mortgage is about £100 more than it was than we started which is still affordable and its still only slightly more expensive than it would be to rent a one bed flat. It is an interest only mortgage however, but the plan was to get on the property ladder and then switch to replayment when we could afford it. Which in our eyes was definitely the right thing as we could never get on the property ladder now.

Again then though, this is a personal opinion. I just do not agree with interest only mortgages unless you're putting away enough money to cover off the capital for when the mortgage expires. Otherwise I class interest only mortgages as just almos like expensive renting. Yes, you've agreed to buy the property but at the end of the day the bank still owns that property. You're not making any arrangements to pay off the capital. Again, I thought the same when I was back in the uk and having got stung a little in that crash and thinking what could I have done that was just sensible.

 

If we werent migrating to Oz then that time would be now. However, the plan has changed slighlty to rent this place out, start renting in Oz and then once we're settled hopefully buy something there after a year or two when we've saved some money (will go with some savings aswell to start us off). We will rent the flat in the UK and keep it as an investment for the future (we can cover our mortgage with rent comfortably). We already have some equity in the flat despite the market crashing, maybe only £10,000/15,000 but that's still money we wouldnt have made if we were renting. If our plans dont work out and we need to sell the flat at some point then a) hopefully it will be to help us buy something in Oz and b) thank goodness we had the flat to sell when we needed some money.

No wanting to be dismissive but house prices go up and down. You say you've amde 10-15k,I'll say congrats really. Personally the only way a uk flat is an investment is if your yield is big enough. Saying that, aso that 10-15k, not knowing your circumstances at all but could you have made similar by say renting a property and putting the difference into investments from the start? I'm not trying to be negative... more than anything I'm just trying to dismiss the idea that renting is dead money and home owning isn't. Owning a home is only not dead money when the mortgage is paid off. Otherwise you're basically paying interest on a mortgage with is very much so dead money.

 

In my eyes owning a property is a great thing but only if you are in it for the long haul because property will always be worth more in time but that might be a long time.

That's the thing. It's a gamble that it will be worth more in time. Nothing more. It cannot be guaranteed. That's the problem I have with it.

 

My parents have always owned somewhere, done work on it and then moved somewhere a bit bigger etc. They both still own properties now, live comfortable lives (despite splitting the assets when divorcing) and my dad at age 67 has just sold a 1 bed flat he owns out right towards his retirement, happy days. It has been a struggle at times for them but lifes always a struggle in one way or another and I really feel that planning for the future is important,I really dont want to be skint when I retire :cry:. If you've got the disciplne to save up what you would have spent on mortgage well then great but I feel that if you are in it for the long haul then you will never lose on property in the end and there is a high chance it will pay off nicely if you make the right decisions along the way :smile:

Have to say, totally agree with your statement of planning for the future is really important. After all, that's what this whole thing is about isn't it :D. That's also a nice example to read. Have to say well done to your parents.

 

Sorry for the long rant but I felt that there was mostly negative info on here about owning a propery so wanted to put the other side forward. Loads more I could say but decided not to really over do it....... :biglaugh: :eek:

 

I dont think it was a rant, very much the start of a good debate :D

Also, I dont think there's a lot of negative about owning your own home at all. I personally think it's a great thing if you take that leap. I know how it feels to 'own' your own home and I;d say generally that's a fantastic feeling. Just dont over stretch yourself to do so... That's basically my point.

 

Again, apologies if none of that makes sense. Last night posting drunk on cideer, this morning/afternoon, ergh my hangover lol!

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I was watching the news about a week ago and there was a report in depth about the artificially inflated house prices here,and how the bubble will burst soon as it is not sustainable!What do you think?I hope it does,from a purely selfish angle,so i can get a house!

Cannot afford to buy and live a decent life here at the moment,i prefer the latter at present!!!!:wink::goofy:

 

Well if you are hoping for a drop in house prices so you can afford a house then you must also be hoping for a huge spike in unemployment.

 

If you cant afford a house now I wonder how you would manage with no job or a job with 25% pay cut.

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Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

 

This calculator is a good one to use in the rent or buy debate.

 

Coming form Ireland I have to say I am hearing the same noises( ie we will get a soft landing etc) in the Aus press that we heard here approx 3 years ago.

 

Look what happened our housing market - down 50% and back to 2001 levels.

 

I do no think that the Aus bubble will burst that much but looking at the affordability of buying ( cost of house approx 7 times income) it is certainly in for an adjustment.

 

Ireland was a different scenario, having an open door policy to Europe most of the lower paid workers were eastern Europeans who rented (especially Dublin). During the boom the population was booming and they needed to be housed. Young Irish people were buying 3 or 4 houses and renting them out to immigrants thinking it was a good investment (although they were a bit Greedy) until the GFC hit and most of the big Blue Chip corporations used the excuse to move out to cheaper dingy country's like India. Most Irish people who were left unemployed then got lower paid jobs working in factories, cleaning, shops & hospitality. The eastern europeans moved back to their own countries and a lot of houses were left empty, no rental income and the people were trying to off load houses cheaply to avoid foreclosure.... thats how the property crash happened. Over supply of housing with no demand....Because of GREED.

 

Of course then developers stopped building mid-project because of negative demand, hence all the 'Ghost Estates' just lying 1/2 built and unfinished and because the Banks? Government had guaranteed Developer loans that is what sunk the banks which in turn sank the Government.

 

Causes for the property crash in Ireland

 

1. Uncontrolled Immigration.

2. Bad developer planning

3. Minimum Wages way above what they should have been.

4. Greed

 

If you want my opinion WA & Perth is very similar to Ireland in that there is a boom in one particular sector that is responsible for the population boom there, if that sector went down the tubes a good portion of the population would be forced to sell up and move away...and property prices would tumble.

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Ok,for me an interest only mortgage would suit because....

(A) i wont be answerable to anybody if i own my own place,that is THE main reason above all other financial considerations.

(B) we wont be ending our years in oz anyway i very much doubt,and i dont believe a property in oz will be less in value in 10/15 yrs time than it is now,even allowing for a fluctuating housing market,so i expect there to be at least enuf in the hse to pay off the mortgage(which is all i want),the lower monthly payments im making would allow me to save anyway,just the same as cheaper renting would allow me to save.

© we would obviously have more disposable income each month,very much the same as renting,but i wouldnt be at the beck and call of a landlord.

(D)Eventually we will have more than enuf money to buy a property outright in europe anyway,so thats what i will be doing,an interest only mortgage,we will probably head back to europe within 10/15 yrs anyway,in the meantime i will have had more money in the here and now to enjoy oz,and wont be answerable to anybody,also im a bricky by trade,already done one hse up from the bare brick by myself(barring plumbing+wiring)so theres no reason why i cant improve/extend whatever property i buy in oz to improve the value,but in truth i dont think i'l bother because like i say were not buying to try and make a financial killing,only to have independence from a landlord,and yes i know the bank will still own our house,but they wont be telling me if i can hang a picture or not,each to their own....interest only mortgage it is for us,end of.


"The problem with neo conservative capitalism and it's insatiable greed for more wealth and disparity amongst the populace,is that it ended up being the catalyst for the great depression and modern recession"

 

Me,tonight:wubclub:

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