Hi all,
I am first home buyer and i need some advice on buying a property, but one thing that's stoping me at the moment are the high interest rates.
Should i take a step back and see how the market is doing before i jump in?
From what i have heard and read in the papers, the house prices is not seem to be slowing down, and if i don't jump in now and buy at X price i might have to pay extra in the near future of the same property.
What should i do?
– Jimmy
They are predicting rates will rise till 2011. So if that is what is holding you back it could get worse. Rising rates often means rising prices (in general and property prices).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Jimmy,
I would predict interests rates to rise in 2010 as well and as Terry pointed out usually with rate rises there are also property price increases.
What you need to do is assess your financial position and determine how much you can afford. In my opinion rising interest rate prices should not be a deterrent to invest provided you are able to cover the costs. Just make sure you do your figures and if you find that you are stretched perhaps think about purchasing a cheaper property.
Hope this helps
Alaister Low
Hi Jimmy,
Property price will go up and if you wait for a year or two, you will be paying more price as well as interest. Double loss. Check your monthly budget, How much is rent and how much is surplus at the end of the month (saving). For example, In 2007 I used to earn $1000 after tax. My rent was $350 per week and other expenses like fuel, movies, groceries, school fees, insurance etc etc were $400 per week. So we still had $250 left to spend. we bought my PPOR in Feb 2008. With Gove subsidy $7000 and our saving of 20%, we bought our First home. We were paying $530 per week. There are some online calculators, we used to calculate loan, repayment etc.
Now circumstances have changed, wife also works, mining job so we bought 3 IPs.
My advice: Just Do It.
Hi Jimmy,
Firstly I think its really important to understand that despite the RBA's three consecutive rates rises, compared to the Australian long term trend interest rates are still actually relatively low. Most economists believe the cash rate for this cycle will peak around 5.5% (or approx 8% SVR before discounting)
I honestly feel that there is never a better time than the present to buy property providing you research the area thoroughly and ensure you are buying at the right stage of the property cycle for that particular suburb. That said its really important you speak to a trustworthy broker or financial planner.
Personally I wouldn't feel comfortable buying unless I could afford the IO repayments of at least 3% higher than the current cash rate, although everyones appetite for risk is different.
Last but not least, be careful about basing your decisions on what papers tell you. Ultimately they are there to sell papers so will only print stories that will engage their audience, and so often you will only read the extreme highs and low's as opposed to the reality.
Regards
D2B
Jimster,
If you look at the long term interest rate figures, rates are actually quite low at the moment.
As Terry pointed out, your restricting factor is likely to get much worse in the near future. Majority of estimates are predicting 0.75 – 1.0% RBA cash rate rises next year… and as we have seen from Westpac, CBA and ANZ, it is possible the banks will raise rates above the RBA increases.
Especially given the unemployment data that came out earlier in the week, 2 or 3 quarter rate rises may now come in the first half of 2010.
Cheers,
YIFirst of all, i like to say thank you to Young Investor,D2B,Alaister Low ,Terryw and IP Investor
For your guidance and thoughts, i have taken that action to find a property, i am living in Melbourne, southeast, and thiking of hunting up north. CORIO and Werribee.
Being this is my first property, i could only afford as little as 280k, where else do you think i should be looking?
Thank You
jimmy.Y
Look very closely at Laverton. Basically it is a suburb of fibro looking RAAF houses. They tend to have large rooms and sit on decent sized blocks. It is an area that is literally surrounded by new and improved areas, and they are closing in fast. It is just a matter of time before Laverton follows suit by default. And not much time, I wouldn't have thought. 12 to 18 months I would imagine.
Another one to look at is Melton. Be careful about which areas of Melton you look at. There are certain areas in which the council won't be keen to allow subdivision on.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hey Jimster, just keep in mind that this is a forum about property investing – most people on here are actual investors and have the view property prices are going to sky-rocket and you'll be priced out. Similarly, if you go on a property bear forum you'll be told people's honest thoughts that prices will drop slightly or by up to 30-40%.
Its a pretty big decision if you cant afford it at current interest rates, and everyone has compelling reasons why property should and shouldnt go up in value in the next few years. Only time will tell who is right! FYI Interest rates are still at lower than normal levels, there is no way they are going to stay this low in the long run
You must be logged in to reply to this topic. If you don't have an account, you can register here.
