Just don't forget the capital side of the equation. No point earning $5k per year in cash if you're losing $10 per year in capital.

Rising unemployment + rising interest rates + tightening lending standards + reduced first home buyers grant + lower incomes + lower immigration = bad for property prices.

I think this will happen. I have been saying as much to anyone who will listen.

It's hard to say what you should do without knowing more about your personal circumstances. I personally would pay off the credit card and as much of the loan on the rental property. Being debt free is a good thing. Especially if you're unemployed.

Given that the FHOG is a bigger proportion of your price range, you will have less risk of losing equity after the FHOG is removed. Property prices don't fall too fast because people hold out on selling as long as they can. You're more likely to see significant falls until 12-18 months after the FHOG is removed.

I'm glad the FHOG is being reduced too. If only they took it away completely. If you can't save a deposit, then how are you going to pay off a $400k loan? The intention of the FHOG may have been good, but the effect is not. That is going to become clearer over the next couple of years.

What do they charge 3% on?

I would say that the first home owner's grant has made a lot of people greedy. And the market hasn't fallen much here yet. I don't think we're near the bottom yet.

I would sell. Reducing the mortgage on your main home will reduce interest which is a guaranteed way of becoming wealthier. Consult a tax accountant for principle residence rules. There should be a way to avoid CGT.

Scary stuff. Australia could yet have its own "subprime" crisis.

The time to invest in property again will be when incomes are high, or at least normal relative to house prices. At the moment, the best capital result you could hope for is a flat one (ie no capital loss). This is why Steve recommends cash flow positive investing. -If you're unlucky, you'll start losing capital, but at least you won't be losing…[Read more]

For an investment as big as a house you'd be crazy to not consult a solicitor for the contract. I wouldn't concentrate so much on the fees as the price you're paying for the house. That is far more material. Don't forget to think how you'll cope if interest rates go back to 7.5%. Or how you'll feel when house prices come back to their normal level…[Read more]

Anyone who is doing the right thing can pay in cash.

Age is not such a barrier, but I would recommend saving a bigger deposit (plus a buffer) and waiting until unemployment looks like it is going down. At the moment it's going up. http://financialdisasters.blogspot.com This could be a few years away. Better to be patient rather than paying tens of thousands of dollars too much. You won't make money…[Read more]

We definitely haven't reached the bottom. We have only just seen the edge of the cliff. http://financialdisasters.blogspot.com