in trouble

As Mortgage Advisor said, you can get loans pre-approved, I think that most lenders keep your application valid for the following 6 months (?). If your wife has been with the company for a while and her position was made redundant, she should hopefully receive a payout package which would help out with the repayments while she looks for work.

If this isn’t the case, maybe she should start looking for new work now?

Cheers

SetMeFree,

I empathise with you and your wife’s situation. Unfortunately there are many people in a similar situation to yourself and there are many players who are responsible.

Firstly I agree that it is a tragedy that our government taxes those who earn a high wage soo much (as I have said before I am not against streaming income from the rich to the poor) but not at the ridiculous levels we do here in Australia. If we had a government who were willing to reduce taxes don’t they realise it would also stimulate our economy and also indirectly increase other taxes (GST). With more money in our pockets we would be able to increase our consumer spending (rather than just doing it through credit) and therefore boost our local economy. It would also provide people with the opportunity to invest more and take the burden from the government in the future.

We also can’t forgot those individuals who have promised to make people multimillionaires in a few years. It has taken me 40 years (im 55 now and started work at 15) to make a multimillion dollar portfolio and it is a tragedy that people have offerred many people false dreams. A lot of people have fed off the fears of people and advised them to invest in areas that they were not knowledgeable about. Property is like any other investment, it is important to understand a person’s risk profile, insurance protection, ability to service debts, spending patterns, etc. before advising which financial instrument is the most appropriate for that individual. Unfortunately the Australian public has been sold the false hope that by investing in property we will all become millionaires with a passive income of $500K per annum in just 5 years. Well yes this is possible but not after 5 years. Like I said it took me 40 years to build such a portfolio but our societies desire to have everything now feeds this “need” to have it all now. I truly hope that some of the pain that we will experience in the next couple of years as a society helps us to get back to basics. To learn the basic fundamentals of investment, to stop following the herd and to know when to cut one’s losses.

I think you are in that position. With regards to the super fund there are a lot of issues in your strategy which I do not have the time nor ability to answer in this forum. My only suggestion is to consultant a good accountant and/or tax lawyer.

You really need to sit down with your accountant and work out a few things:-

1. What is the current market value of this property ? Basically what will you get if you sold now and how much of a loss will you make by selling.

2. Can you afford to service the debt (taking into account revenue from renting the property) without your wife’s income. The IT sector has been hit very hard here in Australia. The same has happened in the UK and is only recently coming back from a couple of years of difficult times. Even then the days of earning 1,000 pounds per day are over. Those rates went down to 300 pounds per day and are now back to 500 pounds per day depending on your skill set. I am not sure what your wife does but I would be budgeting for the fact that she will probably not find work for about 3-6 months. Outsourcing to India has become fierce and will continue in the future.

3. You need to do a comprehensive cost/benefit analysis and do an NPV (Net Present Value) analysis over a 5 year period. This will assist in determining what decision to make. You will need a competent accountant. If they stare blankly when you say NPV go elsewhere.

4. Learn from the experience. Learn that having a multimillion dollar portfolio isn’t everything. I don’t know where you live but the best things in life are always cheap. A coffee ($3) with friends discussing politics, music, sport, sufferings, joys. This is what life is about. A walk with your wife in a local park. Visting a local art gallery. Experimenting sexually. All things that don’t cost much but make life wonderful. Don’t worry if this experience costs you but it is what you take away from it. Remember that other people have lost millions but have also gained it back. Focus on the important things in life and the other things will follow.

I am expecting a number of OTP purchases needing settlement this year to be worth less than the contract price. I have already seen some concrete evidence of this.

There are options available depending on the individuals circumstances. Walking away from the contract isn’t always a choice. You may well be responsible for marketing it again and any shortfall in sale price from your offer.

All the best to you.

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.