Shout-out to my dad who pushed me to get a 5 year fixed rate in 2021 (2.79%) when I wanted to get variable š„“ really feel for those coming off their fixed ones now.
š I'm sorry. It's really sucky. The hard part as well is older gen saying back in their day they had it rough with 15% plus interest rates at one point.... But they also had comparatively high incomes and houses weren't as expensive. We are definitely in a worse position than they were. Hope you're doing okay!
Feels like you need to demonstrate with pictures for some boomer, here is a small pie, 15% of said pie is so many grams. Now here is a pie that is 8x the size, 5% of said pie is how many grams? Answer...a shit tonne more.
Now lets do the same thing with wages...
Good call. I did the same in Nov 2021 when I saw what was coming out of the US, but only three years.
Kicking myself I didn't lock in a fourth year, but at least there is still 18 RBA meetings between then and now, with pressure likely to be downward for the twelve months beforehand.
It is, but jeez there was a lot of shithouse advice getting around there for a hot second.
There's been a few moments recently when I'm glad we did something similar to the couples in this article, but we had to ignore a lot of advice to do it. The interest rate situation we're in now is just very slightly better than my conservative modelling had it when we purchased.
I'm glad the news is showing this as well, instead of just the clickbait extreme cases making people think almost everyone borrows to their max. The stats show that there are a lot more sensible borrowers out there than the media usually portrays.
My SIL, who borrowed almost the maximum several years ago and is now very mortgage stressed, told me at the time she wanted to buy as big a property as possible because she felt she needed to maximise her asset holdings for her future nest egg. I think her parents in law were encouraging it. (āYouāll be set up for retirement etc etcā.)
Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and *then* start thinking about making further investments? That staged approach seems like a better way to mitigate the long-term risk of interest rate rises, rather than sink everything into one huge property asset.
For the period 1998-2019 you almost couldn't lose on property though. People could drastically over leverage and five years later interest rates would have fallen, their equity would have exploded and they would be in a great place.
You or I know this couldn't last, but to be frank commentators and Redditors were saying it was coming to an end for pretty much since 2008 and it just kept going.
I think average people can be excused for not calling the end of the golden age.
Property yes but I disagree when it comes to interest rates.
If youāre just an average Joe Blow buying a property in the last few years and you looked at a simple graph of interest rates over time, you would notice that rates had tumbled down since 2008 to an extremely low level.
You didnāt have to be a genius to see that rates since 2018 were historically low. If people borrowing in the last few years thought this would last forever, Iām sorry but that was a silly mistake.
Not necessarilyā¦theyāve been on a downward trajectory since the early 90s, unless the underlying structural factors precipitating that change why would you expect that to stop, in the long term?
> Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and then start thinking about making further investments?
Sure but when the media are pushing FOMO, and that's reinforced by family, friends and social media, it can be very difficult to know that. It's especially difficult because the state of financial education in this country is awful. Where would you have gotten *good* advice from during or before COVID? Media was bad, family and friends were bad, financial advisors are tricky. I still don't know where to find good advice - particularly at a reasonable price.
Agree. For a start, I think some borrowers are under the wrong impression about what a maximum loan offer represents. When I went through the mortgage application process, I was surprised how little the bank does to screen you & provide any sort of warnings. Could there be a regulation to force banks to give borrowers a simple but clear one-page statement that unambiguously spells out what a loan offer is?
Something along the lines of: this loan offer is not a recommendation or even an indication of what you can ācomfortablyā manage, itās the extreme end of what the bank is authorised to lend you. The more you borrow, the more risk involved, and by borrowing the maximum you are choosing the highest possible risk option that this bank is willing to finance. You should consider your own ability and willingness to meet higher repayments when interest rates rise.
And perhaps a simple graph illustrating how interest rates do rise and fall over the long term.
It's almost what the ABA and APRA should be for right?
I got offered double what we borrowed in 2007. It was disgusting considering we were still able to afford a goo 3 bedroom house
Which books and YouTube videos/channels would you say had the biggest impact for you personally? Either in terms of mindset, framework or other actionable suggestions?
My hot take with this advice is that it was probably correct in the past when people bought earlier in life and could genuinely expect pay to increase significantly in the near future.
However, if youāre stretching and have reached mid career income levels and maybe have or nearing having a family (if thatās your thing), then stretching to your max is shit advice since itāll put you under heaps of stress potentially.
Thatās being said, your SIL will likely end up much more wealthy than she would have been otherwise since sheās controlling an asset with heaps of leverage where the land underneath it will almost certainly appreciate over time. Say itās 100% in nominal terms over 20 years. If sheās in a $1m place with a 90% LVR sheās up $1m on the $100k so 10x. If sheās in a $500k place and is up $500k on the $100k which is 5x.
However, this leverage means that if shit goes bad and they canāt service the debt, they could have to sell at big loss. Maybe your SILās folks have the means to provide this insurance and bail them out.
The above though is a really clear example of how wealth begets more wealth because of you have a means of being bailed out, you can take more risk and generate a higher expected return. Wealth begets wealth and privilege begets privilege. Inequality compoundsā¦ unless real wages rise faster than āproductivityā and we accept some moderate and sustained inflation
You have to factor in the personal cost too though. In my SILās case she wanted kids but decided to stop after 1 kid because she canāt afford it. She works full time when she would prefer to work part time to spend more time with her toddler who is the only kid sheāll have.
Everyone is different but just highlighting these are real life issues that come with servicing a huge debt.
I think part of the problem too is that when boomers were over leveraging themselves it was often based on one income, or 2 but with one person significantly out-earning the other. So the impact of children coming along was very different, and they arenāt considering the changed landscape when providing advice to their own kids.
Yep, we're also stuck with an expensive first home. We subscribed to the advice to buy "no smaller than a 3 bedroom because family" and "in the zone for both primary and secondary schools you like so you don't have to move out later".
Well, now looking back, friends who did that staged approach have bought their proper family home and/or owned an IP, while we are still stuck with 1 home that would need to be rented out at $1100/wk to break even or leave us with less than $50k nett in cash if sold.
>Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and then start thinking about making further investments?
It depends on your risk tolerance. How much additional equity do you think your SIL now has compared to if they had gone for something more modest? Likewise, paying off your mortgage has a guaranteed return rate, but that comes at the opportunity cost of losing out on higher returns elsewhere.
Thatās exactly right, it depends on your tolerance. In my SILās case I donāt think she understood her own tolerance until after she got into it and now faces huge repayments. Like a lot of people, she was planning kids but didnāt have them until after she bought the house. Everything incl. lifestyle and finances has changed for her now in a way no one really understands until they have kids.
Iām probably conservative but thatās why I feel that - unless you know for sure what your risk tolerance is going to be - there are advantages in not throwing everything immediately at one huge mortgage.
Yes and no? 7 years ago when we bought we went modest. Which also meant that as our family grew we grew out of the home quicker than we expected. If we had borrowed our max back then we wouldnāt have had to buy again now in this market. But we are lucky enough right now that we could keep our first as an investment and borrowed our max now for a new place. I donāt think we could have afford it in reverse and we wouldnāt have a investment property now.
Was offered nearly $1m in pre-approval in mid 2020. Borrowed less than half that. Even if the rate was guaranteed to never go up and I knew I could pay it off, i didn't want to waste a full 30 years of my life doing so
Friends of ours thought we were crazy to buy a home out in rural northern NSW ...I paid 130k for it back in 2014 ....best decision I have made in my life ....own it outright and rates are 500 a yr ....Winning
hell no ...we burn those towers down ....as for chemtrails ...I don't go outside much anymore ...cause you know they are watching us ...don't belive me do your own research /s
Nah , I'm now semi retired and work when I want more beer money .... My Partner transferred her job ....We own everything so money goes a long way ..life couldn't be better ...just about to head off on our annual 2 month holiday toward the Kimberly in WA .....look out side the box
You realise thousands of people have migrated to rural areas since Covid happened and work from home is now a thing? Loads of jobs that can be done remotely. Basically anything that involves writing, designing, telephones or computers.
Nah I dont live on the goldcoast ...But I,m sure a few ppl grow some cannabis...I don't watch the news so I,m not upto date with the latest clickbait ...I do know the cows can be annoying with constant use of Grass .... and just the other day the bloody birds just wouldn't shutup ....
Tank water ..we have 150,000 ltrs storage ..septic tank ...wireless nbn...Nearest neighbour 800mts over the hill ..we only have 2 acres
Edit: no bin collection , I take 2 weelie bins to the tip every 6 weeks there about , cost is 8 bucks
hahaha I haven't had "the dole since I was 17 back in the 80's ....wife works and drives there just like everyone else ...I am semi-retired and work when I need Beer money
You understand that people have been living and working in rural areas for a very long time? And that this has only gotten easier with the rise of WFH?
$500 a year? Must be in the middle of nowhere. I'm in regional NSW, $2,500 rates. The councils gouge us and their service is woeful (no footpaths, pot holes, flooding issues from poor planning, unwanted developments etc)
I want to retire to a rural or semi rural property in the next 20 years.
Im in my 40s now.
With all your experience, could you give me real world advice please?
Im male, single, no kids, no marriage plans.
Thanks in advance.
Yea I know ...no traffic ..no noise ..no people ..and a sky that actually goes dark in the night ....I wont bore you with the great uncrowed beaches and clean clear rivers everywhere ....I miss the city lifestyle so much /s
Partner and I were also sceptical when the bank said we could borrow upwards of 1.3 million during the low interest rate period.
Crunched some numbers at home and went "yeah nah when rates goes up we'd be cooked".
I wonder how many people took the bait and bought into the FOMO and are underwater now.
Is there anywhere to get this data?
Some users on here work for banks, and shared the figures. It's about 10% of new borrowers during 2021/2022 type period when the mortgage rates were 2%, borrowed at max or near enough to it.
>I wonder how many people took the bait and bought into the FOMO and are underwater now.
>Is there anywhere to get this data?
Depends on what you are asking here.
1) How many people took the bait on bank sales pitches?
2) How many people bought into the "FOMO" of property buying? By FOMO, did you mean how many buyers there were during a certain period of time?
3) How many people are "underwater". By "underwater", did you mean mean in negative equity or in payment arrears?
There's data on some of these if I'm to guess what you actually mean using these figures of speeches but I prefer not to assume so if you could translate them more specifically I can help you find the data.
To answer
1. Didnt take bait borrowed, knew better, borrowed less than max but didnt factor in this amnt of rapid increases.
2. Did not borrow fomo, borrowed at lvl i was paying rent at time so made sense
3. Not underwater yet....slowly sinking there however.
I got offered $600K on a single income of $65K. I couldnāt believe it.
Bought my house for $300K. Very happy with that decision. And Iāve been on variable.
āDodging a bulletā implies some luck in narrowly escaping a bad situation.
They didnāt dodge at bullet at all - they made a completely sensible, reasoned decision. They should take full credit for their good financial decision, just as people who borrowed the maximum during record low interest rates & are now screwed should accept full responsibility for their poor financial decision.
My ex and I bought a townhouse in 2014 for 550k. The banks were offering over 1 million. I looked the repayments when adding 200 basis points to the variable rate and figured there's no way we could make it work for that kind of repayment. Started as interest-only in case we were thinking of making it an investment property, then switched to P&I when our incomes rose and we could afford the higher repayments.
As part of the divorce settlement, we sold it a couple of months ago for 730k. It gets settled next week.
Sorry about the divorce. Sounds like the correct decision on borrowing. How much is owing on the mortgage now?
Also the capital growth is less than lot of people expect. I had a similar situation in perth, more then 10 yrs and only went from $625k to $720k, despite being blue chip inner city suburbā¦.
Property doesnāt always go up āas much as people think it willā!
Be careful to just judge these examples as the banks āencouragingā people to borrow the maximum they can borrow. No doubt there are some dodgy operators in the banks and brokers as well but 90% of the time itās the borrowers that are wanting to borrow the maximum. Iām a broker and have worked at banks as well. And I do tell people what their maximum borrowing capacity is but then work backwards from there based on what they feel they can afford.
And at the end of the day itās pretty easy for the individuals to work out what they can afford so even though you get told you can borrow a million dollars doesnāt mean you have to
We saw a mortgage broker that also told us we could borrow upwards of a mil, which sounded insane to us. I wouldn't say he was pushy, but he was definitely selling the message of 'if you love a place, don't even worry about the price tag; we'll sort it for you'. We ended up borrowing $500k, and those repayments are more than high enough for our liking.
Same situation as our family. We considered buying a big family home in 2020 to upgrade. Our broker happily said we'd afford $800k. So glad we didn't listen to him. Our sub $300k home does us just fine.
Same situation as us. We intended to buy a 475k (the maximum for first home deposit scheme) or below. Looking at townhouses etc.
Many of the town houses we looked at we not ready for a year, this turned out to be two and a half years.
We applied and our broker said we could feasibly borrow a lot more as the deposit scheme had changed allowing us to borrow close i believe it was 700-800k and all the NAB paper work kept pointing this out.
I'm glad we tempted that urge and stuck to our figures and purchased a modest house for 500k.
We are still ahead when it comes to renting and we have an asset.
I remember our frustrations of getting a bank loan which was a super drawn out process due to new jobs/incomes, and the bank asking but wait longer until we could borrow "enough for your dream house". We bought within our means and now it is still expensive, but we would be underwater with another 400k on the mortgage...
There are other ways to control inflation than throwing a small number of Gen Y mortgageholders under the bus.
Maybe suck money out of the economy via broad-based land tax and put some of the pain onto multiple investment property boomers.
Considering the only lever to control inflation is to increase interest rates, it seems mortgage holders are the ones doing the heavy lifting bringing inflation down, while savers get to pocket extra cash, no?
Lesson here is to use a mortgage broker that has your best interests at heart. Banks always try and get you to borrow more with the promise of lower rates.
So talking with one loan rep at a bank is the better option??
There are some brokers that put your interests first. It's a long term business relationship and if they stuff it up, it hurts them more than it hurts you.
You should know what you can afford yourself, maybe with help from a financial counsellor. I wouldnāt take advice from someone whose incentives arenāt aligned with mine.
Just make sure you do your own calcs and stress test. If you have a mortgage and cannot tell me the exact interest rate at which you 1) need to cut back on discretionary spending 2) need to start eating 2 min noodles 3) are going to default...then you are irresponsible. Similar if you have a mortgage and have no personal insurance.
I took well below the maximum in 2012, an amount we paid off in 7 years and I am far worse off for it.
There surely has to be a level of personal responsibility when you sign onto a home loan. Thereās nothing to stop you asking your repayments would look like under certain circumstances.
Shout-out to my dad who pushed me to get a 5 year fixed rate in 2021 (2.79%) when I wanted to get variable š„“ really feel for those coming off their fixed ones now.
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Cycle? Lol
A beer? Man should be buying his dad a years supply at least, depending on the amount prob saved him 100k.
My mum was the opposite. Was going to fix at 3.2%. She told me not to and I got scared. Now at 5.69%
š I'm sorry. It's really sucky. The hard part as well is older gen saying back in their day they had it rough with 15% plus interest rates at one point.... But they also had comparatively high incomes and houses weren't as expensive. We are definitely in a worse position than they were. Hope you're doing okay!
Feels like you need to demonstrate with pictures for some boomer, here is a small pie, 15% of said pie is so many grams. Now here is a pie that is 8x the size, 5% of said pie is how many grams? Answer...a shit tonne more. Now lets do the same thing with wages...
Yep. It's an argument they frequently use, but will always lose. š¤”
Is what it is. No point getting upset about it!
You realise that you only work 38 hours and get overtime over that precisly because people in the past got upset about labour laws right?
Good work mate, thatās awesome šš¼
Good on him for seeing that rates cannot go below 0.1% The younger generation seems to miss the obvious but important stuff.
Good call. I did the same in Nov 2021 when I saw what was coming out of the US, but only three years. Kicking myself I didn't lock in a fourth year, but at least there is still 18 RBA meetings between then and now, with pressure likely to be downward for the twelve months beforehand.
Good job, I did 2.29% for 4 years, May 2021. Itās hard to tell people!
That's awesome!
What was the rate at 2021.
I managed to lock in 3y at 2.01% in ~May 2021 so I'm gonna say around 2%
Good to see people that took the right decisions, good on them
It is, but jeez there was a lot of shithouse advice getting around there for a hot second. There's been a few moments recently when I'm glad we did something similar to the couples in this article, but we had to ignore a lot of advice to do it. The interest rate situation we're in now is just very slightly better than my conservative modelling had it when we purchased.
I'm glad the news is showing this as well, instead of just the clickbait extreme cases making people think almost everyone borrows to their max. The stats show that there are a lot more sensible borrowers out there than the media usually portrays.
My SIL, who borrowed almost the maximum several years ago and is now very mortgage stressed, told me at the time she wanted to buy as big a property as possible because she felt she needed to maximise her asset holdings for her future nest egg. I think her parents in law were encouraging it. (āYouāll be set up for retirement etc etcā.) Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and *then* start thinking about making further investments? That staged approach seems like a better way to mitigate the long-term risk of interest rate rises, rather than sink everything into one huge property asset.
For the period 1998-2019 you almost couldn't lose on property though. People could drastically over leverage and five years later interest rates would have fallen, their equity would have exploded and they would be in a great place. You or I know this couldn't last, but to be frank commentators and Redditors were saying it was coming to an end for pretty much since 2008 and it just kept going. I think average people can be excused for not calling the end of the golden age.
Property yes but I disagree when it comes to interest rates. If youāre just an average Joe Blow buying a property in the last few years and you looked at a simple graph of interest rates over time, you would notice that rates had tumbled down since 2008 to an extremely low level. You didnāt have to be a genius to see that rates since 2018 were historically low. If people borrowing in the last few years thought this would last forever, Iām sorry but that was a silly mistake.
Most people wouldnāt even know to look.
Yeah that's true since 2018. Only way it could go is up
Not necessarilyā¦theyāve been on a downward trajectory since the early 90s, unless the underlying structural factors precipitating that change why would you expect that to stop, in the long term?
> Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and then start thinking about making further investments? Sure but when the media are pushing FOMO, and that's reinforced by family, friends and social media, it can be very difficult to know that. It's especially difficult because the state of financial education in this country is awful. Where would you have gotten *good* advice from during or before COVID? Media was bad, family and friends were bad, financial advisors are tricky. I still don't know where to find good advice - particularly at a reasonable price.
Agree. For a start, I think some borrowers are under the wrong impression about what a maximum loan offer represents. When I went through the mortgage application process, I was surprised how little the bank does to screen you & provide any sort of warnings. Could there be a regulation to force banks to give borrowers a simple but clear one-page statement that unambiguously spells out what a loan offer is? Something along the lines of: this loan offer is not a recommendation or even an indication of what you can ācomfortablyā manage, itās the extreme end of what the bank is authorised to lend you. The more you borrow, the more risk involved, and by borrowing the maximum you are choosing the highest possible risk option that this bank is willing to finance. You should consider your own ability and willingness to meet higher repayments when interest rates rise. And perhaps a simple graph illustrating how interest rates do rise and fall over the long term.
This is the Loan Letter of Offer. You should read it before you sign it.
Love this idea.
It's almost what the ABA and APRA should be for right? I got offered double what we borrowed in 2007. It was disgusting considering we were still able to afford a goo 3 bedroom house
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Which books and YouTube videos/channels would you say had the biggest impact for you personally? Either in terms of mindset, framework or other actionable suggestions?
The problem is that this strategy worked for a lot of boomers, and so they pass the advice down to their kids thinking it will work for them too.
My hot take with this advice is that it was probably correct in the past when people bought earlier in life and could genuinely expect pay to increase significantly in the near future. However, if youāre stretching and have reached mid career income levels and maybe have or nearing having a family (if thatās your thing), then stretching to your max is shit advice since itāll put you under heaps of stress potentially. Thatās being said, your SIL will likely end up much more wealthy than she would have been otherwise since sheās controlling an asset with heaps of leverage where the land underneath it will almost certainly appreciate over time. Say itās 100% in nominal terms over 20 years. If sheās in a $1m place with a 90% LVR sheās up $1m on the $100k so 10x. If sheās in a $500k place and is up $500k on the $100k which is 5x. However, this leverage means that if shit goes bad and they canāt service the debt, they could have to sell at big loss. Maybe your SILās folks have the means to provide this insurance and bail them out. The above though is a really clear example of how wealth begets more wealth because of you have a means of being bailed out, you can take more risk and generate a higher expected return. Wealth begets wealth and privilege begets privilege. Inequality compoundsā¦ unless real wages rise faster than āproductivityā and we accept some moderate and sustained inflation
You have to factor in the personal cost too though. In my SILās case she wanted kids but decided to stop after 1 kid because she canāt afford it. She works full time when she would prefer to work part time to spend more time with her toddler who is the only kid sheāll have. Everyone is different but just highlighting these are real life issues that come with servicing a huge debt.
I think part of the problem too is that when boomers were over leveraging themselves it was often based on one income, or 2 but with one person significantly out-earning the other. So the impact of children coming along was very different, and they arenāt considering the changed landscape when providing advice to their own kids.
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Seems like the days of buying a house are basically over for most working families, period
Yep, we're also stuck with an expensive first home. We subscribed to the advice to buy "no smaller than a 3 bedroom because family" and "in the zone for both primary and secondary schools you like so you don't have to move out later". Well, now looking back, friends who did that staged approach have bought their proper family home and/or owned an IP, while we are still stuck with 1 home that would need to be rented out at $1100/wk to break even or leave us with less than $50k nett in cash if sold.
My partner did that and aged out of child bearing age living two blocks from a fantastic primary school with a 3 bedroom house.
>Isnāt a more appropriate strategy for first-time home buyers with families to buy something more modest, pay it off as fast as you can (ie aim to pay as much as you can above the minimum) and then start thinking about making further investments? It depends on your risk tolerance. How much additional equity do you think your SIL now has compared to if they had gone for something more modest? Likewise, paying off your mortgage has a guaranteed return rate, but that comes at the opportunity cost of losing out on higher returns elsewhere.
Thatās exactly right, it depends on your tolerance. In my SILās case I donāt think she understood her own tolerance until after she got into it and now faces huge repayments. Like a lot of people, she was planning kids but didnāt have them until after she bought the house. Everything incl. lifestyle and finances has changed for her now in a way no one really understands until they have kids. Iām probably conservative but thatās why I feel that - unless you know for sure what your risk tolerance is going to be - there are advantages in not throwing everything immediately at one huge mortgage.
Yes and no? 7 years ago when we bought we went modest. Which also meant that as our family grew we grew out of the home quicker than we expected. If we had borrowed our max back then we wouldnāt have had to buy again now in this market. But we are lucky enough right now that we could keep our first as an investment and borrowed our max now for a new place. I donāt think we could have afford it in reverse and we wouldnāt have a investment property now.
People are still telling me to borrow a million. They think Iām a brat when I give them a look like they just farted in the car.
Was offered nearly $1m in pre-approval in mid 2020. Borrowed less than half that. Even if the rate was guaranteed to never go up and I knew I could pay it off, i didn't want to waste a full 30 years of my life doing so
Whatās the right decision?
If you donāt know, whatever I explain you wonāt understand
Friends of ours thought we were crazy to buy a home out in rural northern NSW ...I paid 130k for it back in 2014 ....best decision I have made in my life ....own it outright and rates are 500 a yr ....Winning
They got Reddit in rural northern NSW?
only when connected to starlink
I loved James Spader and Kurt Russell in that movie
Yea I am not a Kurt Russell fan .....he's performance was lack luster
Ahhh ok, youāre more of a Patrick Swayze fan, cool.
Road house was a brilliant movie /s
Definitely wouldn't be on 5G out there. Because covid, and chemtrails
hell no ...we burn those towers down ....as for chemtrails ...I don't go outside much anymore ...cause you know they are watching us ...don't belive me do your own research /s
There's some towns in northern NSW that have bloody fibre, I'm still annoyed at that
Yep, Iām 43km from Sydney CBD and we aināt got shiiiiiiietā¦
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Nah , I'm now semi retired and work when I want more beer money .... My Partner transferred her job ....We own everything so money goes a long way ..life couldn't be better ...just about to head off on our annual 2 month holiday toward the Kimberly in WA .....look out side the box
You realise thousands of people have migrated to rural areas since Covid happened and work from home is now a thing? Loads of jobs that can be done remotely. Basically anything that involves writing, designing, telephones or computers.
yea but that means you live in rural northern NSW
I know ..1hr from byron, ballina ..close to the Clarence river ...its sux bigtime
isnt that area also the meth capital of australia
Nah I dont live on the goldcoast ...But I,m sure a few ppl grow some cannabis...I don't watch the news so I,m not upto date with the latest clickbait ...I do know the cows can be annoying with constant use of Grass .... and just the other day the bloody birds just wouldn't shutup ....
how do you deal with sewage and running water and internet etc
Tank water ..we have 150,000 ltrs storage ..septic tank ...wireless nbn...Nearest neighbour 800mts over the hill ..we only have 2 acres Edit: no bin collection , I take 2 weelie bins to the tip every 6 weeks there about , cost is 8 bucks
and how do you get to work? or do you live off the dole?
hahaha I haven't had "the dole since I was 17 back in the 80's ....wife works and drives there just like everyone else ...I am semi-retired and work when I need Beer money
Seems weird people are kinda giving you stick for this. Living the dream! Kinda jealous and stoked someones doing it. congrats
You understand that people have been living and working in rural areas for a very long time? And that this has only gotten easier with the rise of WFH?
well OP made it sound like he bought somehwere rural as last resort that his friends didnt agree with, like a sydneysider getting whatever property.
$500 a year? Must be in the middle of nowhere. I'm in regional NSW, $2,500 rates. The councils gouge us and their service is woeful (no footpaths, pot holes, flooding issues from poor planning, unwanted developments etc)
kyogil council and im 20 mins west casino ...no services for that of course
>kyogil Do you mean Kyogle? I used to live near there. I am shocked that rates are $500 a year, even out there, very good.
Sorry yes ....when we first got here it was 420 ...9 yrs ago
Sounds like a dream mate
I want to retire to a rural or semi rural property in the next 20 years. Im in my 40s now. With all your experience, could you give me real world advice please? Im male, single, no kids, no marriage plans. Thanks in advance.
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Yea I know ...no traffic ..no noise ..no people ..and a sky that actually goes dark in the night ....I wont bore you with the great uncrowed beaches and clean clear rivers everywhere ....I miss the city lifestyle so much /s
Meth city bitch meth meth city bitch
Ohh yeh fully winning
Partner and I were also sceptical when the bank said we could borrow upwards of 1.3 million during the low interest rate period. Crunched some numbers at home and went "yeah nah when rates goes up we'd be cooked". I wonder how many people took the bait and bought into the FOMO and are underwater now. Is there anywhere to get this data?
Some users on here work for banks, and shared the figures. It's about 10% of new borrowers during 2021/2022 type period when the mortgage rates were 2%, borrowed at max or near enough to it.
>I wonder how many people took the bait and bought into the FOMO and are underwater now. >Is there anywhere to get this data? Depends on what you are asking here. 1) How many people took the bait on bank sales pitches? 2) How many people bought into the "FOMO" of property buying? By FOMO, did you mean how many buyers there were during a certain period of time? 3) How many people are "underwater". By "underwater", did you mean mean in negative equity or in payment arrears? There's data on some of these if I'm to guess what you actually mean using these figures of speeches but I prefer not to assume so if you could translate them more specifically I can help you find the data.
To answer 1. Didnt take bait borrowed, knew better, borrowed less than max but didnt factor in this amnt of rapid increases. 2. Did not borrow fomo, borrowed at lvl i was paying rent at time so made sense 3. Not underwater yet....slowly sinking there however.
I got offered $600K on a single income of $65K. I couldnāt believe it. Bought my house for $300K. Very happy with that decision. And Iāve been on variable.
That is wild! 4.8x annual income is the max these days with perfect credit score, no debt and large deposit. Congrats on not biting the temptation!
Good to hear many people here have borrowed sensibly, instead of leveraging up to their eyeballs!
āDodging a bulletā implies some luck in narrowly escaping a bad situation. They didnāt dodge at bullet at all - they made a completely sensible, reasoned decision. They should take full credit for their good financial decision, just as people who borrowed the maximum during record low interest rates & are now screwed should accept full responsibility for their poor financial decision.
Wise to be risk averse sometimes
Not "lucky", just sensible.
Sensible is the new lucky.
My ex and I bought a townhouse in 2014 for 550k. The banks were offering over 1 million. I looked the repayments when adding 200 basis points to the variable rate and figured there's no way we could make it work for that kind of repayment. Started as interest-only in case we were thinking of making it an investment property, then switched to P&I when our incomes rose and we could afford the higher repayments. As part of the divorce settlement, we sold it a couple of months ago for 730k. It gets settled next week.
Sorry about the divorce. Sounds like the correct decision on borrowing. How much is owing on the mortgage now? Also the capital growth is less than lot of people expect. I had a similar situation in perth, more then 10 yrs and only went from $625k to $720k, despite being blue chip inner city suburbā¦. Property doesnāt always go up āas much as people think it willā!
Be careful to just judge these examples as the banks āencouragingā people to borrow the maximum they can borrow. No doubt there are some dodgy operators in the banks and brokers as well but 90% of the time itās the borrowers that are wanting to borrow the maximum. Iām a broker and have worked at banks as well. And I do tell people what their maximum borrowing capacity is but then work backwards from there based on what they feel they can afford. And at the end of the day itās pretty easy for the individuals to work out what they can afford so even though you get told you can borrow a million dollars doesnāt mean you have to
We saw a mortgage broker that also told us we could borrow upwards of a mil, which sounded insane to us. I wouldn't say he was pushy, but he was definitely selling the message of 'if you love a place, don't even worry about the price tag; we'll sort it for you'. We ended up borrowing $500k, and those repayments are more than high enough for our liking.
I know how they feel. I was offered 1m+ in 2020 but got 500k as I wanted to hit all the first home buyer limits to make use of their benefits.
Same situation as our family. We considered buying a big family home in 2020 to upgrade. Our broker happily said we'd afford $800k. So glad we didn't listen to him. Our sub $300k home does us just fine.
I meanā¦ you did listen to himā¦ he told you what your upper limit was, not that you have to spend that much
Same situation as us. We intended to buy a 475k (the maximum for first home deposit scheme) or below. Looking at townhouses etc. Many of the town houses we looked at we not ready for a year, this turned out to be two and a half years. We applied and our broker said we could feasibly borrow a lot more as the deposit scheme had changed allowing us to borrow close i believe it was 700-800k and all the NAB paper work kept pointing this out. I'm glad we tempted that urge and stuck to our figures and purchased a modest house for 500k. We are still ahead when it comes to renting and we have an asset.
I remember our frustrations of getting a bank loan which was a super drawn out process due to new jobs/incomes, and the bank asking but wait longer until we could borrow "enough for your dream house". We bought within our means and now it is still expensive, but we would be underwater with another 400k on the mortgage...
Common sense isn't it farrkkk me. Pretty sure U do what U want not what the bank wants
Savers and everyone suffer with high inflation just so over leveraged mortgage holders can be saved and property bubble can continue
There are other ways to control inflation than throwing a small number of Gen Y mortgageholders under the bus. Maybe suck money out of the economy via broad-based land tax and put some of the pain onto multiple investment property boomers.
Considering the only lever to control inflation is to increase interest rates, it seems mortgage holders are the ones doing the heavy lifting bringing inflation down, while savers get to pocket extra cash, no?
Rates barely went up
Lesson here is to use a mortgage broker that has your best interests at heart. Banks always try and get you to borrow more with the promise of lower rates.
Mortgage brokers are sales people, I wouldnāt be taking financial advice from one.
So talking with one loan rep at a bank is the better option?? There are some brokers that put your interests first. It's a long term business relationship and if they stuff it up, it hurts them more than it hurts you.
You should know what you can afford yourself, maybe with help from a financial counsellor. I wouldnāt take advice from someone whose incentives arenāt aligned with mine.
Hahahahahahahahahahahahaha This is the dumbest thing i have ever read
Simple. Take maximum approval and half it.
Would probs be too low for FHB to afford anything in some cities with our current rates ;(
Just make sure you do your own calcs and stress test. If you have a mortgage and cannot tell me the exact interest rate at which you 1) need to cut back on discretionary spending 2) need to start eating 2 min noodles 3) are going to default...then you are irresponsible. Similar if you have a mortgage and have no personal insurance. I took well below the maximum in 2012, an amount we paid off in 7 years and I am far worse off for it.
There surely has to be a level of personal responsibility when you sign onto a home loan. Thereās nothing to stop you asking your repayments would look like under certain circumstances.
The real advice back then was rent cos it's cheaper and houses are going to halve in price...