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  • Profile photo of OzzaOzza
    Member
    @ozza
    Join Date: 2009
    Post Count: 4

    Finally, a group in Canberra!

    Have you got much interest so far?

    I'll come and I'll try to drag some like-minded friends with me. If you need my contact details, feel free to PM me.

    Looking forward to it.

    Regards

    Owen

    Profile photo of OzzaOzza
    Member
    @ozza
    Join Date: 2009
    Post Count: 4

    Mate congratulations on your house, it's a big step!

    If you're concerned about high interest rates, it's probably a good time to point out that they haven't been this low in many decades. I think you can be fairly sure that it's not going to be that bad in the next ten years if the banks would offer you 9% fixed. If it helps to know, the reason interest rates go up is because people are spending a lot of money and the rate of inflation increases. As a result, interest rates rise to curb consumer spending and encourage people to save because they earn more interest on their money etc (I've skipped a few steps in there for simplicity's sake). At the moment, we're in a recession so interest rates are ridiculously low. Whether or not they go back to 17% remains to be seen, but while Im no financial expert I think other people will agree with me when they say it's not likely to go back up that much in the near future (the next couple of years). Of course it may never go that high again at all, you never know. If you're really concerned, you can use an offset account (depending on your loan) to reduce the interest you pay on your loan or simply by paying off more of your loan (depending on what type of loan it is). I also agree with not needing to have a fixed rate at 9% for the next ten years, while it does mean more risk, I generally wouldn't want to be paying the extra interest NOW just because I'm concerned about the interest going above 10%.

    Also you're not wrong, in Sydney if my memory serves me correctly, the median price for a unit is around $400-450k. It is a pretty daunting thought and obviously it means that getting your own place can be and is difficult to secure. Of course salaries in the city are generally higher to accomodate this, but housing affordability is pretty poor in a lot of major cities. The government tries to help with the First Home Owner's Scheme but even still, it's become quite a problem.

    Point of all this is that if you're really that afraid of interest rate rises and losing everything; you might find it worthwhile seeing an accountant or financial planner and setting up your affairs in such a way as to offer limited liability so you don't lose everything if the fit hits the shan… so to speak.

    All in all, congratulations! A first home can be nerve-wrecking but you've made a good decision.

    Profile photo of OzzaOzza
    Member
    @ozza
    Join Date: 2009
    Post Count: 4

    Ignoring the number of children arguement that plagued this topic. I have a quick question; I recognise the fact they would have had a rather high DSR, but as spudway said the property was "valued at 205k we
    bought it at 110k ..and putting 50k deposit in".

    If the LVR was only 30%-ish why did they struggle to find finance?

    Profile photo of OzzaOzza
    Member
    @ozza
    Join Date: 2009
    Post Count: 4

    I think this is one of those situations mentioned many times in Steve's books. You've got the same property as everyone else, so you've got to start thinking about what you can offer potential tenants. I.e. If you had it fully furnished or offered a home theatre system or something that makes potential tenants go "That would be an awesome thing to have!" or makes their lives easier. Especially where there are a lot of similar properties, there's got to be something unique about yours that attracts people to it. 

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