Dear All
Firstly I don’t know whether its right for me to post my query in this forum, but then I didn’t find any other forums on property… so posting here.
We are planning to buy our first home, essentially for ourselves to live in. Our idea is to save the rent we are paying out and at the same time we want to enjoy the feeling of being in our home…
We have saved enough money for 20% deposit + expenses which is in fixed deposits at the moment for a property worth 350000. We are paying out a rent of 250/week. We are happy for monthly repayments upto 2000.
But we have so many doubts, are we being over ambitious, should we go for a relatively smaller property.
What if we buy now and want to sell it off in 3-5 years time, will we be at loss ?
what if interest rates go up ?
Are we better off renting ?Thanks
Ole,
I’m a renter, but I would own my own home if I could afford it. I took the investment property road, and I pay cheap rent, but having one’s own home- well, it has to be a good thing :o) As for paying 350k for a home… well, it depends on where you live, but 350k is a modest home in many parts of Australia now. for example, in sydney, that might get you a one-bedroom apartment- have you looked at the market lately? Houses ain’t cheap. I don’t see your ideas as overly-ambitious at all.
Will you lose money in 3-5 years if you sell? Who knows? Will any of us? We might. I try to be realistic about capital gain or capital loss- nothing is guaranteed. Many seminars and property spruikers and real estate books and sites will tell you how much money you’ll make, but in a slower market, I think it’s healthy to not expect quick riches.
If interest rates go up, and they probably will at some point throughout your loan, then you might need to hope for a pay rise, or to pay off extra money throughout your loan, so that you are ahead- as a contingency plan. Are you in a job that has wage rises in line with CPI, or that negotiates a wage renewal package every few years? If so, you should be fine. Interest rates can increase, but so can wages, so all is not lost.
You probably are (fiscally) better off renting- dunno. But if you buy your own home, you can always increase your equity and then use that equity as a deposit on an investment property.
Only you can make your choices about buying a home. but if you’ve got around 80k saved, you’re doing extremely well
)Oops- just thought of something. PPOR’s (your own home) can be thought of as a “liability”, because the interest you pay, and expenses, are not tax deductible, and you earn no income from it. But because you can use it as equity to purchase “income-producing” investments.
I reckon buying your own home is a good idea
kay henry
Hi Ole,
The your own home V renting debate in many cases comes down to a matter or personal choice.
There are those that will passionately pursue their own home while others preferring to buy an investment property and renting out a property, at a rate much cheaper than they can if they were buying. This way they are in the property market with all debt being deductible rather than having a housing loan that is non-deductible.
You haven’t indicated where you are looking to buy so I am not sure whether or not $350K is a typical property price in that area. One mistake often made by home buyers is to over commit themselves and becoming a slave to a mortgage for a number of years.
You will need to factor in some interest rate rises, maybe a starting a family and living on one wage plus allowances for other ocntingencies that do come along in the journey of life.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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