Hi Guys and Gals,
Im lucky enough to be in a position that i think i can buy my first property and i have a few ideas but no idea if they are any good?
first of all im 25 and have saved about $70k as a deposit. im renting in sydneys northen beaches and am paying $210 per week. at the moment i have about $250 per week disposable income that i have just been saving in the past but i can put that towards repayments insted.
so should i keep renting and invest in something cheap say around $200k that i can rent out and pay off. or should i buy something i can live in for say $450k but that will take all my spare income to service the loan.
if i was going to invest id be looking at western sydney or the central coast as potential locations but am very open to other ideas.it has taken me a long time to save this money and now i have no idea what to do with it…….. what would you recomend in my situation?
cheers,
MichaelHI Michael, welcome to the forum. I would suggest buying something in the lower end of the market like you have said, however don't aim to pay it off, get an IO loan and a 100% offset account. Have all of your income go into the offset account. This will allow you to reduce interest payments whilst also being able to accumulate more money as a deposit on another IP. There is heaps of info on here regarding the best financial structure.
cheers
Sonya
motard_mike wrote:Hi Guys and Gals,$70k as a deposit. $250 per week disposable income that i have just been saving in the past but i can put that towards repayments
so should i keep renting and invest in something cheap say around $200k rent out and pay off.With something cheap –
Loan will be $136,000
(6k hidden expense for stamp duty) http://www.apps05.osr.nsw.gov.au/erevenue/calculators/landsalesimple.php#
Rental income of $6000 minus 2000 expenses as a guess so 4k a year
Then 250 a week disposable income is 13,000 a year
Interest at 7% p/a on 136,000 is $9100 so you would be able to pay off loan
You can pay off the loan or get it cash flow positive.motard_mike wrote:or should i buy something i can live in for say $450khidden expense for stamp duty is $16,000
Loan = 450000 – 70,000 +16,000 =396,000
You will get hit with hidden extra expense of Loan Mortgage insurance as well due to 88% LVR between 5k and 6k on a
loan of $401,000
interest at 7% = $28,070 p/a = $539 a week
Now this doesn't include your GAS, Council Rates, Water Rates, Insurance, Power bills, Food, repairs
What if interest rate increases say 0.5%
interest at 7.5% = $30075 p/a = $579 a week
These figures are interest only it doesn't include any repayment over twenty years! Use amortization template in excel 2007 to work this out.motard_mike wrote:but that will take all my spare income to service the loan.
if i was going to invest id be looking at western sydney or the central coast as potential locations but am very open to other ideas.I think you will be exposed to interest rate increases and end up bankrupt if you try to buy near your work at 450k on your income level.
motard_mike wrote:it has taken me a long time to save this money and now i have no idea what to do with it…….. what would you recommend in my situation?Michael I can't answer this as it would be giving you financial advice which I am not licensed to give you such advice.
However the calculations and hidden costs in purchasing a 450k house that have been shown are so you can decide what is the best way for you to go with.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
