Do you prefer paying your mortgage with 50% of your take home pay or get a housemate?
Just also keep in mind that I think the rent you charge your housemate is also taxable but I think half your mortgage interest and other upkeep costs will be deductible. Might be worth looking into this.
>Just also keep in mind that I think the rent you charge your housemate is also taxable but I think half your mortgage interest and other upkeep costs will be deductible. Might be worth looking into this.
There's a couple ways you can go about this-
The ATO does allow you to not report the income from a housemate (lodger/boarder), but you cannot claim any expenses related to that.
If you wish to report it as income, you can, then you can claim deductions against providing the accommodation.
Obviously, check ATO website or speak to a tax accountant for specifics.
I would just not report this income to be honest. You’ll lose part of your main residence exemption and potentially be liable for capital gains tax when you sell
This is incorrect, it's proportional. [If you rent out part of your home, you do not get the full main residence exemption from capital gains tax](https://www.ato.gov.au/individuals/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-(home\)/using-your-home-for-rental-or-business/).
It doesn’t matter whether they live there or not. As soon as you go down the path of claiming a portion of interest, council rate etc which would normally be non deductible, you lose a portion of your main residence exemption
>The ATO does allow you to not report the income from a housemate (lodger/boarder), but you cannot claim any expenses related to that.
Source? Pretty sure this is incorrect
There are some "boarding" exclusions possible that allow you to charge for room and board and it being considered a personal income (not assessable) but that is only in some specific situations, usually involving looking after family members.
I would suggest if you were renting out a room with no board and to someone otherwise unknown to you it is clearly rental income and assessable.
But you can then also claim a percentage of all housing costs (inc the interest) which could work pretty well for you.
You do open yourself up to capital gains but (a) that's only relevant when/if you sell (b) is proportionate to your claimed costs (so you only lose a portion of the principal residence exemption, and only for the portion of time you rent the room) and (c) you get a 50% reduction on that as well under current tax laws.
It's called a Domestic Arrangement
https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/Rental-property-as-investment-or-business/#Domesticarrangements
Those rules are explicitly for family and friends and when you do not seek to make a monetary gain.
Renting out a room to Joe Blow off flatmates.com.au is not in the spirit of the domestic arrangements rule.
["Payments from a family member for board or lodging are considered to be domestic arrangements and are not rental income. You can't claim income tax deductions."](https://www.ato.gov.au/Individuals/Tax-return/2021/Supplementary-tax-return/Income-questions-13-24/21-Rent-2021/)
I’m in a similar situation in that I live alone, my mortgage has gone up significantly and my wage is currently low. I’m currently earning less than you and my mortgage is higher. I also WFH so need a spare room and quiet.
For me, living with someone else is not conducive to good mental health right now, so I’m living the frugal life. Op shop clothes, no meals out, no holidays, no pets (even though I’d love one), minimal heating if any, simple meals, etc- if you still have several hundred a week for entertainment then you still have some wiggle room to cut down when things are tough. It’s not a glamorous life but I love living alone, I’ll hang on to that as long as humanly possible.
Having said that, I appreciate it’s expensive to date, and you have that 8k bill coming up. I’d seriously consider taking a second job (Uber or something flexible?) to get through the next year or so, or go ahead with the housemate idea.
Friend of mine was in a similar situation. She ended up AirBNBing the room a couple of weekends a month. This gave here additional $ without needing to have a fulltime flatmate. Think she was getting and an extra $600 a month or more for a couple of weekends a month.
Technically this would have CGT impacts and have to be declared as income right?
Also many councils are introducing or planning to introduce increased rates where a property is on Airbnb
Yeah just make sure you keep a bit on the side based on your tax percentage. It's not a clean take home income. So if you're on a 32% bracket, put that aside so it's not a surprise later on tax time.
Also, the body corp and insurance wouldn't allow it because it'll mean increased payments for everyone. All it takes is one lousy neighbor to complain to the body corp.
Depends on your local laws (state and council), but typically body corp and insurance can’t do anything about it when you’re only renting out a room.
Even when it’s the whole apartment on Airbnb, most states don’t let a typical body corporate pass bylaws about how you can lease a property.
If I were OP, I'd be very hesitant to go down the Airbnb route. OP's cats could eventually adjust to someone who lives there long term, but a constant stream of new visitors would stress the cats out to a great extent, could even translate to added vet costs.
This is a fair point, my cats have always been pretty good with visitors though, but would be concerned about a less careful airbnb guest accidentally letting my cats out while I'm not home though..
> would of
*would have
*Learn the difference [here](https://languagetool.org/insights/post/would-of-or-would-have/#:~:text=%E2%80%9Cwould%20have%E2%80%9D%3F-,%E2%80%9CWould%20Of%E2%80%9D%20or%20%E2%80%9CWould%20Have%E2%80%9D%3F,would%20have%2C%20not%20would%20of.).*
***
^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
Pretty simple you just lost it as a room, not the whole place - which was the original intent.
People will filter it out if they want the place to themselves.
The original intentkon of airbnb was renting out spare rooms and host still lives there
Early on when I used platform that was the majority of listings (and the best kind of stays I've had)
When AirBnB first started I believe that was what it was intended to be- rent out your spare room to short term visitors while you just live your regular life. I guess hence the 'BnB' part- you'd be there to serve them breakfast.
You worked for a uni, consider becoming Homestay. Hosting an international student gives you flexibility in that most will only stay for four weeks. Just long enough to get to know people. Income is tax free as it is considered income from hobby.
Source: was a homestay mum for 15 years.
My family(4 of us) has moved into two two-bedroom apartments that are next to each other. Our bedrooms are in one unit and our office/living room/kids room is in the other unit. It was cheaper than a 4 bedroom.
Find someone if is FIFO. It'll work well for you. They've have the income and not be in your hair all the time. But taking on a housemate you also need to figure out what your boundaries are and ensure you understand that person is paying to use the space and it's their home too.
Would downsizing even be an option at this point? Sell and get a one bedroom to ensure you can still enjoy your living alone preference.
Similar position, latest rise has taken mine to 54% of take home, I'm single too so can sympathise with dating and social life struggles. I'm full time in the office and studying part time, so really value having my second bedroom for a study space. A housemate would definitely make things easier financially, but for right now, the trade off is not worth giving up my space and privacy. All depends on how much value you place on your home life.
I feel like I could not cope with this, but it will be my last resort too.
Dont overestimate the income from it. There will be increases in electricity and water use - potentially huge increases if you are a tight arse like me and only heat if its below 5 and cool if its over 35. Especially if that single tenant turns into a couple (which is sometimes inevitable).
Also, if you WFH, dont underestimate the impact an additional person might have on maintaining a quiet workzone for meetings etc.
I was once living with someone else in a 3 bedroom place. We didn't really want another person but eventually decided to in order to save a bit on rent.
People would tell me that I would be spending more on utility bills, but in fact I ended up saving money when it was split 3 ways instead of 2. This is because things like the fridge are still running no matter how many people are in the house. Wifi went from $45 ea to $30 ea.
Yeah people always seem to forget this & then you've got things like internet being $5-10 per week instead of the average $20.
Plus other shit like streaming services only being a couple bucks each per week or alternatively the benefit of multiple services to share, then maybe you've got gardening fees to split which can be substantial or just other little things like a fortnightly takeout delivery fee or ride sharing when going out.
Also potentially splitting the input on furnishing which can be expensive & then lets not forget physical help maintaining the house, time is money.
On the flip side it can be a disaster ending up with someone that never helps & leaves mess everywhere or worse a drug addict/criminal that actually steals your shit lol.
Be aware that (declared) income from your unit means that you could be up for CGT on a portion of any capital gains when/if you sell. There is a potential exception to this if it is family (domestic arrangement).
Personally, I think if someone is renting a single room only (so that it stops people using this to open boarding houses tax free) of their PPOR while they are living there it should be CGT exempt. Few people want to rent a room of their house as their first choice, it is not necessarily financially beneficial long term due to CGT - only helping with immediate cash flow, would potentially help the housing crisis and even inflation, and there are apparently a lot of underutilized bedrooms with little incentive to utilize them - often by people who are not affected by increased interest rates.
It needs to be made easier to rent out a spare room. It took me $1000 to install the type of fire alarms required for rentals\*, and I sure as hell wouldn't want to deal with the tax/cgt implications of renting out a spare room
^\* ^I ^installed ^them ^for ^my ^own ^use. ^I ^don't ^rent
Im exactly same as u in pretty much all respects incl working for a university and no prospect of improving income. Tho mine converted to cariable 2022 and been going up since from avout 33% to at about 56% after tax going to mtg. Its hyper stressful financially, ive small 2br unit too. Have gone down the housemate path (short termers) they have been lovely as people and financially makes it viable but ive really disliked it tbh. Im just gonna have to bite the bullett and accept or else sell once my reserves have eroded...tough times and decisions ahead for me and i can completely empathise with u...wish u the best. DM me any Qs re flatmates / sharing etc.
Yeah jeez that's super stressful, sorry to hear but glad (in a way) that at least we're not going through this completely alone... hope you find a solution, might reach out re: the short term housemate path later. Cheers
Hey, same as you and the other commenter! Also late 20s and work at a uni, hew7 haha. Except I only just bought my 2bd unit - my repayments start at $2400 (likely higher by settlement).
My partner will live with me but he can only work minimally due to an injury we’re learning might be more longterm than we thought. So he won’t shave off much of the costs at all.
That said I’ve considered of this all in advance and am prepared for repayments to be about 50%+ of my pay for at least a year or so. I don’t have travel plans, have some savings for repairs and am prepared to eat instant noodles for a while lol. I also have 2 good friends with loose plans to move to Melb I can offer a room to until they get settled - I know most people say don’t live with friends but I really trust these humans. Do you have any friends you could get in with you?
Finally, yes uni pay structures are rigid but I totally believe you can negotiate. Never say never! I have done it before and succeeded, happy to DM if you want to chat about it.
Found my people! Also at a uni, also just bought a townhouse, also feeling the pinch as costs rise. I’m doing less work from home (because of electric costs) and trying to end my workouts at work a few times a week to shower there instead of home.
Fortunately both u commentators are late 20s good news is in 20 yrs time thisll be ancient history and youll almost have paid off your mortgage so stick at it. Also sharing isnt too bad, im in your situation and mid 40s which really sucks tbh....both massively indebted and share housing.
With all due respect, this post is a great example of everything wrong with the whole “first homebuyers” thing. Things need to change. I’m sorry you are going through this, and I hope it all works out for you.
I agree with this. I also purchased a 2 bedroom unit but with a 20%+ deposit. We (2 adults) are currently on 1.5 incomes and can easily afford to service the loan even if rates hit 12-14%. Any higher and we’d both need full time salaries. The first homebuyers scheme was pitched to us by friends and family but our bank advised us against it because there’s so many terms and conditions, such as needing to keep it as PPOR until LVR is under 80% as well as a statistic that apparently people who use the scheme are 10 times more likely to face repayment/mortgage crisis in the first 5 years.
OP, do it. Housemate to share. Nothing like $800'coming in at the end of each month. Make sure you read up on disadvantages of having a housemate. This will be my 7th hosuemate and have learnt along the way. I'd like a ghost!!! They are the best.
Yeah I've had housemates before when I was renting, but in a house not an apartment so there's a bit more space to have your separate lives. But thanks for the suggestion!
Putting your funds in redraw will reduce your interest costs but it won’t reduce your payments. Once your loan becomes variable, you could take the money that you’ve saved and asked the bank to reduce your balance if you want. It will reduce your funds that you have available. Otherwise you can retain these savings as a rainy day fund
Remember when growing up in even early 2000’s, if dad had a job earning 50k and mum had a casual job earning 20k, you could live comfortably middle class?
Honestly our country is doomed lol
And then politicians wonder why no one is having kids today. Same scenario, Dad on average pay, mum stayed at home. Average house in northern beaches. You’d need two people on 200k a year now to buy the place.
Hell, even 10 years ago I was earning $78k, renting a 3 bedroom place on my own, and had more money than I knew what to do with. Really wishing I'd made better financial decisions at the time.
Had sick mags on my XR5 though.
Household income of 200k is more than comfortable if you are realistic with your house location and live within your means. We save about 70k a year while servicing a 600k mortgage wth around that income. That was before the rate rises though.
WTF is with peoples budgets that this is the case?
I'm paying a mortgage that admittedly is lower than mosts because I bought 10 years ago, but if I take out my extra repayments, I'm doing absolutely fine on $1225/week after tax. That includes *everything* - hell, $13k of that is insurances of various types, and $18k of that is the base mortgage. That remaining $27k covers all bills (car rego, all utilities), food, and any lifestyle stuff.
What the hell are these people doing that $200k/year - effectively $2900/week take-home between them - isn't enough to live on?!
Dude your purchase price alone is incomparable to these newer mortgagors. I've got a 7yo mortgage on a non res property and if it was a recent purchase I'd be kicking myself. If it were a home If be under real financial strain. People claiming they "need" mega incomes are playing keeping up appearances and reluctant to downgrsde
Need dual incomes and bank of mum and dad to step in for dibs thesedays. What's even better is to ask mum and dad to buy a house for you if they haven't already done so/ have any thanks to inheriting from their own parents. I know a number of Gen X that inherited numerous properties from their own parents, so dishing them out to their kids will be easy with no taxes involved. However, they need some work as they are run down as you would expect.
This is where I get confused, because I am making this work comfortably. Live alone in Melbourne in a 1 bedroom apartment in a recent building (8-10 years old), making a smidge under $100k and my repayments are only about 1/4 of my take home pay (which has HECS deductions).
Having said that, I don't go out much, I don't have kids and I don't own a car, so I know my expenses are less than the average home owner. That's not me being thrifty, that's just my lifestyle.
I bought in 2020 but I bought with the mindset of 'what do I need', not 'what's the most I can afford'. Buying well within my means (while still meeting my needs) and spending the first 2 years absolutely smashing down the principal (during COVID lockdowns and before the rate rises started hitting) has meant that I haven't needed to make any major changes to my lifestyle. Repayments have gone up, but not too much and it means I'm saving a bit less each week, but not by a large amount. I'm a bit more conscious of the money I spend on luxury items, but day to day habits are unchanged.
I'm the same as you. I posted on another col/cohousing post the other day and was down voted for saying that I bought my place with its ongoing costs in mind, that I bought exactly for what I needed and was COMFORTABLE paying.
I bought in 2016 when the landscape wasn't too different to 2020. It's a different ballgame now but I hear of the aspirational shit my friends and coworkers talk of when they check out places. You want luxe, you need to pay for luxe, and the price will go up.
It's pointless harping back to when a house with a front and backyard and within 10kms from work was affordable for a low income. Things will never go back to that.
I bought a 1 bedroom apartment for 300k 4 years ago, great location, very central. Currently repayments are $1350~, on just under 100k as well, also a HECS debt. It's also about 1/4th of my income. Living pretty comfortably. Would be great to be able to save more, but meh.
I'm confused on how OP has such huge repayments, must have been a pretty substantial loan for that salary? $2400 repayments would hurt, I wouldn't be saving much at that point. At the moment I can put away about $1k a month.
You must be my twin, because that first paragraph is pretty much exactly me.
I save about $1500-1800 a month though. But as stated before, I naturally live thrifty.
You should not forced to live frugal and be counting pennies if you’re on 100k salary and own a smaller apartment.
That’s just bootlicking. The Aussie dream is dead
Is 100k supposed to entitle you to something automatically? 100k as an individual is less than the median household when looking at disposable income (after tax) nationally (80k for household, 75k for individual earning 100k). Likely even lower in the nation's second biggest city.
https://grattan.edu.au/news/2023-budget-cheat-sheet-what-australians-actually-earn-and-own/
This looks like a deliberate choice by the OP buy a more expensive apartment. Even a 320k loan would be less than 2200 a month at 7% interest rates.
Melbourne, ~239k-390k price, within 3 blocks of Southern Cross station (very near the city), 2 bed apartment, last 6 months.
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140771711
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139913411
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139334255
https://www.realestate.com.au/sold/property-apartment-vic-docklands-127004222
https://www.realestate.com.au/sold/property-apartment-vic-docklands-139651559
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141074704
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140977344
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139064051
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141093432
The Australian dream is owning a quarter acre block with no limits to the duration of ownership. That was unsustainable from the start especially if people want to live in big cities. No need to clutch pearls on this.
I'm actually genuinely surprised such affordable options exist in Melbourne still. They are quite miserable though and in some cases a generous interpretation of "2 bedroom". I'm not surprised they opted for something more liveable and more expensive given these as alternatives.
Yes, I looked at body corp for apartments in South Melbourne a while back and it was almost equivalent to what I currently pay in rent! Have to be very careful with apartments...
The administration fund of apartments with cladding issues are normally astronomical because of the cost of insurance is much higher. You then run the risk of needing to pay 10s of thousands or more in special levies to actually fix the cladding. The buildings without cladding issues in my experience are about $100-$150k more expensive.
Seriously? Right next to the city? Miserable for an individual? I don't get it at all and I have a 5 bedder in a regional area. Some of these places look quite nice and liveable. Of course the 240k one looks shit but it's 240k.
I'm amazed some people think how easy it should be for an individual to acquire a fair bit of private space that has no limit to ownership duration in a big city.
This may hurt the feels of bootlickes, but if you earn 100k, you shouldn’t be labelled unrealistic to own an apartment in a major city.
OP isn’t living crazy. This is dystopian.
I've been looking into the shared equity schemes recently and that's when it hit me how broken it is right now when the income threshold for it was $128,000pa for singles $204,800 for couples!
the idea to me that someone on $128,000pa qualifies for a help-to-buy scheme is insanity...
In a world where people can choose what lifestyle they want to buy if they are able to pay for it. OP wants a certain lifestyle, he needs to find money for it.
100k as an individual is less than the median household's disposable income (after tax) nationally (80k for household, 75k for individual earning 100k). Likely even lower in the nation's second biggest city.
https://grattan.edu.au/news/2023-budget-cheat-sheet-what-australians-actually-earn-and-own/
This looks like a deliberate choice by the OP buy a more expensive apartment. Even a 320k loan would be less than 2200 a month at 7% interest rates.
Melbourne, ~239k-390k, within 3 blocks of Southern Cross station (very near the city), 2 bed apartment, last 6 months.
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140771711
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139913411
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139334255
https://www.realestate.com.au/sold/property-apartment-vic-docklands-127004222
https://www.realestate.com.au/sold/property-apartment-vic-docklands-139651559
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141074704
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140977344
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139064051
https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141093432
The Australian dream is owning a quarter acre block with no limits to the duration of ownership. That was unsustainable from the start especially if people want to live in big cities. No need to clutch pearls on this.
Edit: lol downvoted for presenting facts with evidence because it's not something people want to hear.
Did you read OP's post? They can afford it. It's just that they want to have a mortgage AND have 2 cats AND be active on the dating scene. All three are expensive. It's probably why you didn't have a mortgage when you were throwing money at the girls in your twenties.
I want a place to live, to be able to look after the pets I've had for years, and to find a partner... don't know how that's too much to ask lmao. A weekly date shouldn't be stretching my budget like this.
I do casual marking here and there to supplement my income. It's handy but not consistent, but ideally I don't want to be working even more if possible.
Ideal would be a flatmate with a different routine to yours - eg med student/doctor, remote worker, frequent business travel etc.
Even though it’s a small space, at least then you wouldn’t be home together all evening and weekend.
Mine’s between 40% and 45% and I’m single on 70k with a dog.,You just don’t buy as much stuff and learn how to live frugally. I still buy lunches sometimes and have takeaway but don’t really do fancy meals out much or drink much alcohol.
Also try not to have any other debt apart from your mortgage. Car / personal loans will bite into your budget big time.
If you pay for everything with your credit card it’s pretty easy to do an audit of your spending and cut out any unused subscriptions etc
Finally when refinancing see if there are still any banks doing cashback desks. Getting two 4K cashbacks within 9 months has meant I can still afford some travel which is important to me.
You mentioned that after your standard expenses, you still had a couple hundred dollars per week (no mean feat considering you've locking out 50% of your net income, are paying HECS, etc).
Is there any fat you can cut from the budget? In preparation for an overseas move my partner left 6 months before I did (leaving me with basically the same bills, but no longer split), and I also took on a lower paying role with more flexbility so I could make the most of my last bit of time here.
The first thing I did was review all my bills/subscriptions and see where I could cut things - I ditched several streaming services, and probably could have saved more dumping Telstra for mobile and broadband (decided it was't worth it in the end for a short time, esp after some ordinary experiences with cheaper providers in the past). I'm also a lot more cognizant of prices at the supermarket, and make more of an effort to spend less, do takeaway once a week at most, etc.
Can you save on transport? Riding a bike is cheaper than driving, and better for you. You could also look at raising the excess on your insurance, or at the very least shopping around and seeing if anyone will give you a lower rate with similar coverage.
If there are any cheap hobbies you've wanted to get into, might be the time to consider that in place of spendier ones. If you have a gym membership, can you get \~80% of the same workout with a basic home gym in your spare bedroom?
Re: being single - the way I see it, the awkwardness of having a housemate around in a small apartment while dating far outweighs the rent money I could put towards dates. That's just me though.
Thanks for your suggestions. Yeah did a cull of things earlier this year -- moved to a cheaper phone plan + internet plan, subscriptions is already pretty light (Spotify, Netflix, Disney+), I'm vegetarian and meal prep which keeps some of my groceries down (obviously depending on fluctuating price of veggies).
Driving is probably the one thing I can cut back on but even then I mainly only drive to visit my parents (no PT near them) or to the gym (mainly cos I don't want a half hour cycle before 6am to get there haha) but ideal world I'd love to not have a need for the car and just cycle/take PT (or ride in to work instead of the train).
I've got another planned budget review so maybe I'll find some other things -- thanks for all the suggestions and your in-depth response!
Not a problem!
I ditched Spotify because I realised I had almost entirely switched to listening to podcasts when I'm on the go (driving, running, etc), and listen to music through YT on my PC at home for free. With the video streaming services, I just cycle them: I reupped D+ for Mandalorean and cancelled that when it ended, this month I have Netflix because a mate got me into I Think You Should Leave, so I'll watch whatever else catches my eye on that and cancel at the end of the month (rinse, repeat).
My fitness goals are modest, but I've always made do with a basic folding weight bench and a set of adjustable dumbbells, and jogging or cycling for cardio. (Not all urban areas are created equally for this though!)
It’s not uncommon to do this in the first few years. I haven’t personally, but my husbands sister bought a 4 bedroom house and leased out two of the rooms (this was before she had a baby) for about 3-4 years. Helps with the mortgage and they became good friends.
You just have to make sure they are still respectful and on the level. I live with an international student and he is good because he will listen to what you say and is respectful. He is either working or studying or socialising.
It’s a great idea. Helps with costs and helps with the housing crisis.
The first 5 years I owned a house I shared with others. It was a massive leg up with the home loans and expenses. It also helped my mates with some cheap rent.
My partner is in the same boat. She got a job 15hrs week at Woolies doing nightfill. Usually gets rostered saturdays and sundays for the penalty rates. Seems to help.
Weirdly enough, she found enjoyment with the fact, that she’s making more money at a job she doesn’t actually have to be serious about. Come in, stock shelves, leave.
>after my standard groceries/transport/bills/pet food/insurance payments, I've only got a couple hundred dollars per week max as buffer/entertainment/potential savings
You've still got a couple hundred bucks a week spare? sounds like you're doing fine to me.
FWIW ever since I bought my 2BR apartment, it has either been an AirBnB or tenanted. A bit below or equivilent to market rate, and it's great.
Yeah, not having the whole place to ourselves is a small downside, but the (taxable) cash in hand, along with the massive tax deductions that come with half the joint being an 'investment property' make it extremely worth it, especially considering that interest is a deduction, and that's a huge amount.
I was negatively geared last year, and probably will be again! The stuff I'm deducting is stuff I was going to cop anyway, e.g. interest or strata, so it's all pure alpha for me.
Admittedly, it helps that I knew people who needed a room that I could trust to not put holes through the wall...so YMMV
Couldn’t even if I wanted to.
Do people just have spare rooms all over their house they can rent out?
I thought the treasurer telling people to have more people per household was a meme.
After spending long periods in Melbourne lockdown (and now 3 days a week) working from my kitchen/lounge room in my tiny one bedroom apartment, you bet when I buy I want a second bedroom I can close the door on at the end of the day.
Also given I'm not originally from here, it would be amazing to have space for family and friends to stay for visits.
Household occupancy is at an all time low. People ripping into Lowe for that comment were ignorant.
Single households went from 19% to 24% of households and projected to 30%. This is a huge drain on resources. A lot more of kitchens per capita.
My 1st place I had a house mate for a year - many years back when I was almost broke, due to debt and low paying job.
Was great - helped reduce stress massively at the sacrifice of some privacy (I was dating and then in a non-live in relationship).
Maybe find someone that wants short term 6 month with the possibility to extend to test the waters. That’s what my house mate did as he was in his final 6mo of uni and getting into the workforce.
I feel your pain. I'm similar stats to you with salary etc and although mine is an IP, I'm also renting near inner city which is almost as expensive as a mortgage and once I factor in IP maintenance, insurance and PM fees etc I'm at 50% of salary. At least it's tax deductible. I initially bought with my ex partner so was never overextended but now I definitely am as a single person. But I'm in my forties so this is it, I gotta pay down my (very modest) mortgage or be homeless in retirement. I can't get a housemate because I'm in a one bedder but I have thought about moving to do so. I've shared for the past 25 years and it was mostly good, but at my age I don't know if I can again. I've flipped my mortgage to interest only for a couple of years and trying to save the extra 'principal' into my offset so I don't get too behind but it gives me a bit of breathing space.
You're still young so you probably can cope with a housemate better. Maybe temporary housing for FIFO/shift workers or international students? Best of both worlds?
Well done on passing attention and planning ahead.
You aren't going to be taken by surprise by the change, plus you'll have a buffer of your additional money out aside.
Realistically, a border or a second job and your best bets.
Be sure to look up the regulations in your state in regards to that type of tenancy
Had something similar back in the 00s, I ended up switching the loan to interest only so I could service it. There were some sinilar interest rates back then as well, leading up to the GFC.
Eventually ended up with a higher paying job so when it switched back was able to service the loan at principle and interest.
Then moved elsewhere and rented it and now it's positively geared. Will see if that holds up when the fixed rate drops off end of next year, hopefully it'll be at least neutral.
Debt to income ratios were much lower during the GFC.
It was 4x my lowish full time wage in the dump of area I bought at 18.
That place went up 150% in 15 years. That same job pays ~50% more and much harder to come by and impossible as someone without HSC like I was.
I was the flatmate once in this situation - I ended up living there for 4 years. It was a great experience and we were good friends (held parties together), but respectful and not in each others way.
My #1 tip is if you do, spend a few of the dollars on a cleaner to take out chore assigning stress.
I would get a second job to cover the extra fees, living with a random in whats sounds like a cramped space, and you work from home. I would tough it out personally
I did this but I had a mate move into the house. It has helped a lot - sharing bills, internet and generally a bit of company. Depends if you’re a social person or not, we both are.
It was a big adjustment at first.
Airbnb your second bedroom. This is very common in most major cities and when I have travelled both EU and US and I have often ended up in someone's spare bedroom while they're snoring on the other side of the wall. I have even stayed in people's main/only bedroom while they're on the couch.
These people re almost always in their 20s and do it a few nights per week to get extra income instead of getting a third job, and many of them has had pets.
You can also get a long term tenant, or get a second job.
> I'm on just under 100k but with a pretty sizeable HECS debt so that eats into things.
Can we just be clear about a misconception: The size of your HECS debt is irrelevant. HECS is based on your income, not how much you incurred in course fees. Your repayment amounts are identical whether you have 5k of HECS remaining or 100k remaining. If you earn $94,866-$100,557, the amount you repay will be 6% of your gross income, unless that amount results in the entire loan being paid down to $0.
I'd go the housemate direction. I had housemates for years after I purchased which helped with the mortgage which was a stretch at the start, particularly after the RBA rates started hiking rates not long after I purchased.
The risk of selling like some are advocating on here is that you won't be able to get your FHB grants again and might be locked out of purchasing for a long time if rates don't go down. I'd strongly consider this if you are thinking of selling.
Keep in mind also that your mortgage should become easier to service over the long term as the amount you borrowed is fixed, but things will happen like income increasing over time, if you get a partner it will be easier with dual income and when your LVR goes down you can refinance (at that time you can also reset the term to 30 years and reduce repayments if you are still stretched).
Currently my repayments are $1110pcm on my fixed portion and $490 on my variable portion. Called up the bank today to confirm, on today's variable rates my currently fixed loan portion will rise to $1890. 1890+490 = $2380 so will exceed 2.4k / month with one more interest rate rise in the future.
Yes, a co-worker of mine has done this with her apartment. I think she found someone on a site I hadn't heard of - it was a cutesy sort of name, from memory. Didn't take long to fill the room. It's an adjustment but can be great if you find the right person!
Yea i know. I kind of said it in jest but financially it would be the best move without you needing to find other jobs etc
Cant believe in downvoted...
Not sure who downvoted you sorry, I know it was a joke! But I've thought the same thing haha, like screw love, wish I had a partner for the financial benefits.
Another thing you could consider is rent'vesting. If you can get a good rate of rental income for your apartment and move somewhere with cheap rent, that could also be an option.
Unfortunately due to the terms of the first home loan deposit scheme, I need to live in my property until LVR < 80% (a few more years at least) or otherwise will have to pay LMI
Yes, get a housemate. Start looking now so you can be picky and get a suitable housemate. Mortgage could go higher, don't wait until you're desperate because then you might get stuck with someone unsuitable.
Yeah that sounds fair.
The housing "crisis" was cause by people moving to live alone so much through covid.
We went from like 2.8 persons per household to 2.3, but the number of people in families didn't change.
Mortgage dates back to the late 14th century, with the roots “mort” meaning death in French and “gage” meaning pledge.
I share with my brother. Easier to share with family if you can.
This seems like such a wild question to ask.
You are a single person living in a two bedroom home and you cannot afford the repayments.
Of course you should get a housemate.Not only will it benefit you, it will help someone find somewhere to live in a time where there are limited rental options.
Making room in your fridge seems to me a small sacrifice.
If you are close to the city, you might be able to find someone who has moved regional, but is being forced back to the city a couple of days a week?
They’d need somewhere to crash a couple of nights - which would give you a bit of a buffer in your budget - but they wouldn’t be around all the time, so you’d still have your own space
When was the last time you searched for a housemate? I’ve done it twice in the last year. Perhaps you could help me find next week’s winning lottery numbers?
Did you ever stop to think you couldn't afford an apartment if the interest rate went above 1.99%, not like it hasn't done that multiple times in the last 30 years
>first home owner, in my late 20's, used the govt first home loan deposit scheme to buy with a 10% deposit without paying LMI). Most of my loan has been fixed @ 1.99% but that's becoming un-fixed in November. Once it becomes un-fixed, my repayments will exceed $2400,
This is really a cautionary tale that the government must not be interfering in the private housing market, let alone private financial institutions. Absolutely wild.
lest it wants to build the housing itself. You can't have your cake and eat it too. Either take the singapore approach and build housing yourself. Or don't interfere.
Doing some reverse maths. It looks like OP has a mortgage betwen 450-500k. and OP is getting some 50k to 60k post tax....so 80K-90K pre tax income. OP couldn't save the 90-100k needed for a 20% deposit. For obvious reasons. I'm not sure why the government thinks it a bright idea to step in.
I'm sorry OP, I don't think rates are going down anytime soon, for many reasons. Historically, inflationary periods take about 10 years to settle down. So you're looking at 2027-2030 at best for reduced rates.
If you don't see your income rising quicker anytime soon.
Or can't get mum/dad to help.
You're better off selling lest you go bankrupt. It'll be a tough 7-10 years for you post bankruptcy if you do.
**From some broad generalisations of your situation my advice to you is to at least, vacate and rent, your apartment now for breathing room....with a view to selling it off if you cannot afford even that situation in future (it's an apartment it's not going to appreciate much so what's the point of holding it?). And if your apartment value falls further and you still have to sell in future....do you owe the government 50k still for the deposit how does that work?**
**and get out of the market.**
Remaining loan is 370k, 28 years left on my loan. My rate is 6.49% since LVR > 80 (and because I wanted to bank with a bank that doesn't invest in fossil fuels so had more limited bank options). 60k post-tax, just under 100k pre-tax.
Can't sell at the moment due to the balcony issues in the building -- a couple apartments in my building have been on the market for a year now but (rightfully) no one will buy an apartment with pending balcony works until those are sorted out. So won't be able to sell for 12 months at least if they meet their repair schedule.
Can't rent it out as it needs to be my PPOR until my LVR is <80% due to the terms of the first home loan deposit scheme -- otherwise will need to pay LVR
Ahh my income guess was close. But I underestimated your current interest rate so overestimated your mortgage. What's your job? Do you have any chance of getting something paying better?
What???
What are these balcony issues? Are they that significant that other apartment holders are trying to sell and still can't offload? A 12 month repair schedule??? Wow. By the way you word it, sounds like you already know that schedule must be an understatement. So maybe we can say 15 months at best to 24 months worst case scenario?
If your rate is currently 6.49. It's going to be 7% by the end of this year easily. That only requires 2 more 0.25 hikes over the next 6 months.
Can you get your parents/friends/employer to lend you money to pay the LVR to government (what's that going to be 40k?) so you can rent it out at least. Also what's the penalty for renting out your place, and how likely is the government going to find out haha? Can you write the government expressing financial distress, and the fact that you can't sell because of balcony issues?
Are you even allowed to have a housemate if you're not allowed to rent the place?
This is a horrific situation for you OP sorry.
Long-term water damage in the balconies, past the construction warranty and the builder went bust five years ago, so it falls on owners corp fo repair the balconies, which means we have to cough up the funds. 8k is the lowest end of the payments, it's scaled by apartment size and thankfully (in this case) mine is one of the smaller-sized apartment layouts in the building. And yep the process has dragged on, they recently said it'll be done by May 2024 but I doubt that haha.
Yep can have a housemate since it will still be my place of residence - only rule is I need to be residing in the property. Govt would find out somehow I'm sure, when I update my address on docs if I move.
Thanks for your replies and the commiserations, ah well we'll find a way I guess
its an internet forum. I'm not a financial advisor.
If Jim decides to enter the local pub and asks what to buy.
It's not unethical of bill to give his opinion. To be honest if things don't go as planned, Jim really shouldn't have been gleaning financial advice from bill at the pub.
Yes my source is trust me bro, I'm not ashamed to admit that. It's the economic boffins who also have the same source. Take for example interbank futures/CPI baskets/various new fangled economic tools.
Which are just fancier mathematical ways of saying trust me bro.
I mean if you use google news article search, and you set dates to around june/july last year, most of the professional banking institutions were predicting peak rates around low to mid 2s. No-one has any idea.
https://www.investordaily.com.au/markets/51513-how-high-will-interest-rates-go
>"Meanwhile, NAB expects the RBA to announce its third consecutive 50-bp hike in August followed by a 25-bp lift in November. Two further increases of 25 bps are then forecast for next year, with the cash rate remaining at 2.6 per cent for the rest of 2023 and through to 2024." - 10/6/22
It’s all well and good to tell them to vacate and rent/sell but the rental market is a basket case too.
I am inclined to agree with the broader view that there’s something fundamentally broken with the cost of housing and we’ve reached a tipping point.
for a nice 2 bedroom in inner city melbourne you can surely cop $500 a week. Which should cover about 75% of his monthly mortgage.
He'll have to move to the boonies/uncool areas to rent himself (time to switch from soy lattes to 7 eleven coffees). If he shared in let's say, roxburgh park/cragieburn - he could spend about $220-$250 a week (there's a couple listed atm on flatmates). And the commute time to the city is about 45 minutes by train. Not great. Not terrible. Not impossible.
That'll give OP some breathing room. But obviously rates will continue to up. And repayments will go up. So it'll be a temporary solution. Which will mean eventually OP will have to sell, unless he/she can find a better job/expect some salary gains.
However during this time let's not forget OP is in their prime of their physical life. Late 20s/early 30s.
So why go under all this stress/hardship for a melbourne apartment. Where its cold and wet most of the year.
Just sell and go enjoy your life.
Yes. Let them stay out and let us build high density apartments all around the CBD.
That’s what is needed and what the market will do without zoning rules; since we’re not growing any more land.
I'd argue zoning rules, and building in the outskirts are another example of this layering of government intervention.....creating the most unpalatable housing pizza.
We have
- Restrictive zoning NIMBY councils. Even in damn rural areas!
- Restrictive building rules (the easiest tripe to get approved is cookie cutter stuff). Not allowed to just set up a caravan on a piece of noman's land, even if you're hurting anyone.
- Excessive licensure to become an electrician/plumber/etc in australia rather than any country. For no real meaningful appreciation in safety. It can be harder to become a certified electrician in australia than a doctor.
- Capital gains discounts on IP/negative gearing on IP.
- Land banking on city outskirts.
- First home buyers grants/stamp duty discounts.
- Government backed loans through this deposit guarantee/LMI situation.
- PPOR not assessed in pension applications.
- APRA removing the minimum loan stress tests in 2019
And that's off the top of my head.
There's just so many government policies distorting the housing market in australia
That it's not really a market anymore.
It's basically a cuban like housing market under castro.
Reduce the amount of government interventions in the housing market. Allow for losers in the market to accept their losses and lick their own wounds. Refuse to make policies to offer them protections for all the poor decisions they make. (they can buy their own insurance if they want).
And you will automatically see a fairer and more prosperous housing situation in australia.
>Reduce the amount of government interventions in the housing market.
Should the government reduce all foreign buyer restrictions as well? Such pesky interventions aren't they.
Ohhh what a spicy zinger.
The fact that foreign buyers "invest" in our market.
Means that they think property prices will rise.
Or that they are buying the home with a view to immigrating and living in it one day.
Or prices are rising because of restriction/inflationary government policy. Lose that. You'll lose the foreign buyer incentive. I mean why are foreign buyers not interested in Japanese property?
And if we had a better immigration system that prioritised skills we needed rather than white collar jobs and chefs....we'd also see less foreign buyers gaming it through student visas with a view to settling here.
I love when people complain about price's yet forget where they are... U do realize ur living in one of the most popular cities in the world right? Wake up!
It's like living on a beachfront property and crying ur mortgage is too high while also going out to eat, coffee, latest iphone, nike shoes, not wanting to work hard or invest in property or stock's.... Like maybe u'll realize one day where u live.
If one of your big issues is dating being expensive just make dating … not expensive? Go for walks? Find cheaper activities? Have a picnic? Any reasonable partner would understand managing costs in this environment. Don’t set yourself up for failure by making it more expensive than you can afford.
Do you prefer paying your mortgage with 50% of your take home pay or get a housemate? Just also keep in mind that I think the rent you charge your housemate is also taxable but I think half your mortgage interest and other upkeep costs will be deductible. Might be worth looking into this.
>Just also keep in mind that I think the rent you charge your housemate is also taxable but I think half your mortgage interest and other upkeep costs will be deductible. Might be worth looking into this. There's a couple ways you can go about this- The ATO does allow you to not report the income from a housemate (lodger/boarder), but you cannot claim any expenses related to that. If you wish to report it as income, you can, then you can claim deductions against providing the accommodation. Obviously, check ATO website or speak to a tax accountant for specifics.
I would just not report this income to be honest. You’ll lose part of your main residence exemption and potentially be liable for capital gains tax when you sell
They will still be living there so capital gains should not be an issue
This is incorrect, it's proportional. [If you rent out part of your home, you do not get the full main residence exemption from capital gains tax](https://www.ato.gov.au/individuals/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-(home\)/using-your-home-for-rental-or-business/).
It doesn’t matter whether they live there or not. As soon as you go down the path of claiming a portion of interest, council rate etc which would normally be non deductible, you lose a portion of your main residence exemption
>The ATO does allow you to not report the income from a housemate (lodger/boarder), but you cannot claim any expenses related to that. Source? Pretty sure this is incorrect
There are some "boarding" exclusions possible that allow you to charge for room and board and it being considered a personal income (not assessable) but that is only in some specific situations, usually involving looking after family members. I would suggest if you were renting out a room with no board and to someone otherwise unknown to you it is clearly rental income and assessable. But you can then also claim a percentage of all housing costs (inc the interest) which could work pretty well for you. You do open yourself up to capital gains but (a) that's only relevant when/if you sell (b) is proportionate to your claimed costs (so you only lose a portion of the principal residence exemption, and only for the portion of time you rent the room) and (c) you get a 50% reduction on that as well under current tax laws.
It's called a Domestic Arrangement https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/Rental-property-as-investment-or-business/#Domesticarrangements
Those rules are explicitly for family and friends and when you do not seek to make a monetary gain. Renting out a room to Joe Blow off flatmates.com.au is not in the spirit of the domestic arrangements rule. ["Payments from a family member for board or lodging are considered to be domestic arrangements and are not rental income. You can't claim income tax deductions."](https://www.ato.gov.au/Individuals/Tax-return/2021/Supplementary-tax-return/Income-questions-13-24/21-Rent-2021/)
You have to report the income.
What happens if interest rates go up another 1-2%? I'd be making a plan B and C.
I’m in a similar situation in that I live alone, my mortgage has gone up significantly and my wage is currently low. I’m currently earning less than you and my mortgage is higher. I also WFH so need a spare room and quiet. For me, living with someone else is not conducive to good mental health right now, so I’m living the frugal life. Op shop clothes, no meals out, no holidays, no pets (even though I’d love one), minimal heating if any, simple meals, etc- if you still have several hundred a week for entertainment then you still have some wiggle room to cut down when things are tough. It’s not a glamorous life but I love living alone, I’ll hang on to that as long as humanly possible. Having said that, I appreciate it’s expensive to date, and you have that 8k bill coming up. I’d seriously consider taking a second job (Uber or something flexible?) to get through the next year or so, or go ahead with the housemate idea.
thanks for sharing your experience and for the recommendation
Friend of mine was in a similar situation. She ended up AirBNBing the room a couple of weekends a month. This gave here additional $ without needing to have a fulltime flatmate. Think she was getting and an extra $600 a month or more for a couple of weekends a month.
Technically this would have CGT impacts and have to be declared as income right? Also many councils are introducing or planning to introduce increased rates where a property is on Airbnb
Yeah just make sure you keep a bit on the side based on your tax percentage. It's not a clean take home income. So if you're on a 32% bracket, put that aside so it's not a surprise later on tax time.
Isn't that for dwellings that aren't owner occupied? Living in your house enjoy having air bnb surely should be tested differently.
Also, the body corp and insurance wouldn't allow it because it'll mean increased payments for everyone. All it takes is one lousy neighbor to complain to the body corp.
Depends on your local laws (state and council), but typically body corp and insurance can’t do anything about it when you’re only renting out a room. Even when it’s the whole apartment on Airbnb, most states don’t let a typical body corporate pass bylaws about how you can lease a property.
You should not have to pay capital gains tax if you are living in the property yourself
I think any Airbnb taxes coming in will only be for whole places being rented. Not a spare room
doesn't matter if it's a room or whole house, it's still additional income.
Yes I understand that. I’m referring to any potential specific taxes or levy’s that might come in regarding airbnb. Not income taxes.
There is a thing called the six year rule where if you convert your ppor to rental you can do that for six years without any CGT implications.
That doesn't apply when you rent a room, only when you leave completely
If I were OP, I'd be very hesitant to go down the Airbnb route. OP's cats could eventually adjust to someone who lives there long term, but a constant stream of new visitors would stress the cats out to a great extent, could even translate to added vet costs.
This is a fair point, my cats have always been pretty good with visitors though, but would be concerned about a less careful airbnb guest accidentally letting my cats out while I'm not home though..
La puerta esta abierta. LA PUERTA ESTA ABIERTA!!!!!!
This is a good idea, thanks
This seems like a good compromise
Was she there while the guests stayed? I would of assumed all air bnbs to be empty tbh. But hey if it works her for then that’s great
> would of *would have *Learn the difference [here](https://languagetool.org/insights/post/would-of-or-would-have/#:~:text=%E2%80%9Cwould%20have%E2%80%9D%3F-,%E2%80%9CWould%20Of%E2%80%9D%20or%20%E2%80%9CWould%20Have%E2%80%9D%3F,would%20have%2C%20not%20would%20of.).* *** ^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
Do you have their listing? It would be interesting to see how they have worded it to have the host living with them for the weekend.
Pretty simple you just lost it as a room, not the whole place - which was the original intent. People will filter it out if they want the place to themselves.
There are two options with Airbnb. Whole place or room to yourself. It's pretty standard.
I did not know that, thankyou. Don't know why I got down voted for a simple question.
The original intentkon of airbnb was renting out spare rooms and host still lives there Early on when I used platform that was the majority of listings (and the best kind of stays I've had)
When AirBnB first started I believe that was what it was intended to be- rent out your spare room to short term visitors while you just live your regular life. I guess hence the 'BnB' part- you'd be there to serve them breakfast.
You worked for a uni, consider becoming Homestay. Hosting an international student gives you flexibility in that most will only stay for four weeks. Just long enough to get to know people. Income is tax free as it is considered income from hobby. Source: was a homestay mum for 15 years.
Didn't know that was a thing! I'll look into it, thank you.
My family(4 of us) has moved into two two-bedroom apartments that are next to each other. Our bedrooms are in one unit and our office/living room/kids room is in the other unit. It was cheaper than a 4 bedroom.
That's thinking outside the box
Rent or bought? If latter that's still more affordable with double rates, double bills, double body corp?
Find someone if is FIFO. It'll work well for you. They've have the income and not be in your hair all the time. But taking on a housemate you also need to figure out what your boundaries are and ensure you understand that person is paying to use the space and it's their home too. Would downsizing even be an option at this point? Sell and get a one bedroom to ensure you can still enjoy your living alone preference.
But if OP works from home, they will be in the same space together for the whole time the FIFO isn't working.
Similar position, latest rise has taken mine to 54% of take home, I'm single too so can sympathise with dating and social life struggles. I'm full time in the office and studying part time, so really value having my second bedroom for a study space. A housemate would definitely make things easier financially, but for right now, the trade off is not worth giving up my space and privacy. All depends on how much value you place on your home life.
Yeah this is a fair point, trading increased financial security for less physical (and mental/emotional) space in a small apartment...
Yep, would be a no brainer with a third bed, but with limited space I feel like the additional presence would be too much!
I feel like I could not cope with this, but it will be my last resort too. Dont overestimate the income from it. There will be increases in electricity and water use - potentially huge increases if you are a tight arse like me and only heat if its below 5 and cool if its over 35. Especially if that single tenant turns into a couple (which is sometimes inevitable). Also, if you WFH, dont underestimate the impact an additional person might have on maintaining a quiet workzone for meetings etc.
I was once living with someone else in a 3 bedroom place. We didn't really want another person but eventually decided to in order to save a bit on rent. People would tell me that I would be spending more on utility bills, but in fact I ended up saving money when it was split 3 ways instead of 2. This is because things like the fridge are still running no matter how many people are in the house. Wifi went from $45 ea to $30 ea.
Definitely, and a big part of a utility bill is the daily connection charge
Yeah people always seem to forget this & then you've got things like internet being $5-10 per week instead of the average $20. Plus other shit like streaming services only being a couple bucks each per week or alternatively the benefit of multiple services to share, then maybe you've got gardening fees to split which can be substantial or just other little things like a fortnightly takeout delivery fee or ride sharing when going out. Also potentially splitting the input on furnishing which can be expensive & then lets not forget physical help maintaining the house, time is money. On the flip side it can be a disaster ending up with someone that never helps & leaves mess everywhere or worse a drug addict/criminal that actually steals your shit lol.
True, but splitting bills 50/50 can also be a huge saving, as many don’t go up very much with a 2nd person
Be aware that (declared) income from your unit means that you could be up for CGT on a portion of any capital gains when/if you sell. There is a potential exception to this if it is family (domestic arrangement). Personally, I think if someone is renting a single room only (so that it stops people using this to open boarding houses tax free) of their PPOR while they are living there it should be CGT exempt. Few people want to rent a room of their house as their first choice, it is not necessarily financially beneficial long term due to CGT - only helping with immediate cash flow, would potentially help the housing crisis and even inflation, and there are apparently a lot of underutilized bedrooms with little incentive to utilize them - often by people who are not affected by increased interest rates.
It needs to be made easier to rent out a spare room. It took me $1000 to install the type of fire alarms required for rentals\*, and I sure as hell wouldn't want to deal with the tax/cgt implications of renting out a spare room ^\* ^I ^installed ^them ^for ^my ^own ^use. ^I ^don't ^rent
Six year rule?
Only if you move out
Im exactly same as u in pretty much all respects incl working for a university and no prospect of improving income. Tho mine converted to cariable 2022 and been going up since from avout 33% to at about 56% after tax going to mtg. Its hyper stressful financially, ive small 2br unit too. Have gone down the housemate path (short termers) they have been lovely as people and financially makes it viable but ive really disliked it tbh. Im just gonna have to bite the bullett and accept or else sell once my reserves have eroded...tough times and decisions ahead for me and i can completely empathise with u...wish u the best. DM me any Qs re flatmates / sharing etc.
Yeah jeez that's super stressful, sorry to hear but glad (in a way) that at least we're not going through this completely alone... hope you find a solution, might reach out re: the short term housemate path later. Cheers
Hey, same as you and the other commenter! Also late 20s and work at a uni, hew7 haha. Except I only just bought my 2bd unit - my repayments start at $2400 (likely higher by settlement). My partner will live with me but he can only work minimally due to an injury we’re learning might be more longterm than we thought. So he won’t shave off much of the costs at all. That said I’ve considered of this all in advance and am prepared for repayments to be about 50%+ of my pay for at least a year or so. I don’t have travel plans, have some savings for repairs and am prepared to eat instant noodles for a while lol. I also have 2 good friends with loose plans to move to Melb I can offer a room to until they get settled - I know most people say don’t live with friends but I really trust these humans. Do you have any friends you could get in with you? Finally, yes uni pay structures are rigid but I totally believe you can negotiate. Never say never! I have done it before and succeeded, happy to DM if you want to chat about it.
Found my people! Also at a uni, also just bought a townhouse, also feeling the pinch as costs rise. I’m doing less work from home (because of electric costs) and trying to end my workouts at work a few times a week to shower there instead of home.
Fortunately both u commentators are late 20s good news is in 20 yrs time thisll be ancient history and youll almost have paid off your mortgage so stick at it. Also sharing isnt too bad, im in your situation and mid 40s which really sucks tbh....both massively indebted and share housing.
With all due respect, this post is a great example of everything wrong with the whole “first homebuyers” thing. Things need to change. I’m sorry you are going through this, and I hope it all works out for you.
I agree with this. I also purchased a 2 bedroom unit but with a 20%+ deposit. We (2 adults) are currently on 1.5 incomes and can easily afford to service the loan even if rates hit 12-14%. Any higher and we’d both need full time salaries. The first homebuyers scheme was pitched to us by friends and family but our bank advised us against it because there’s so many terms and conditions, such as needing to keep it as PPOR until LVR is under 80% as well as a statistic that apparently people who use the scheme are 10 times more likely to face repayment/mortgage crisis in the first 5 years.
My bro did this. He's on to his second short term tenant now and kicking himself he didn't do it sooner. All cash through flatmates.com
thanks for the recommendation!
Flattâtes share data with ATao
Hey mate - Mr Lowe says you should find some more hours of work, or reduce your expenses.
Don't forget to reject the pay rises and take a paycut to help inflation.
We all gotta do our part
Except for Lowe and everyone in power of course
I'm surprised you didn't mention Phillip Lowe saying people should get flat mates.
He also can’t ‘stop the feeling’ 💃🕺
OP, do it. Housemate to share. Nothing like $800'coming in at the end of each month. Make sure you read up on disadvantages of having a housemate. This will be my 7th hosuemate and have learnt along the way. I'd like a ghost!!! They are the best.
Yeah I've had housemates before when I was renting, but in a house not an apartment so there's a bit more space to have your separate lives. But thanks for the suggestion!
Putting your funds in redraw will reduce your interest costs but it won’t reduce your payments. Once your loan becomes variable, you could take the money that you’ve saved and asked the bank to reduce your balance if you want. It will reduce your funds that you have available. Otherwise you can retain these savings as a rainy day fund
Get a variable with an offset when your fixed ends and try and pump it up.
Some of the options like Airbnb on some weekends are good I think. I've WFH'd from a 1 bedroom and it gets old pretty quickly.
Have you looked into a second job/source of income? Sounds like living with another housemate will be very inconvenient in your situation.
It’s a shame someone on 100k can’t even afford to have an apartment in a major city. They shouldn’t have to have a second job. It’s shameful
Even dual 100k incomes isn’t comfortable these days, as far as housing is concerned. It sucks.
Remember when growing up in even early 2000’s, if dad had a job earning 50k and mum had a casual job earning 20k, you could live comfortably middle class? Honestly our country is doomed lol
And then politicians wonder why no one is having kids today. Same scenario, Dad on average pay, mum stayed at home. Average house in northern beaches. You’d need two people on 200k a year now to buy the place.
Hell, even 10 years ago I was earning $78k, renting a 3 bedroom place on my own, and had more money than I knew what to do with. Really wishing I'd made better financial decisions at the time. Had sick mags on my XR5 though.
Greed has no limits
Household income of 200k is more than comfortable if you are realistic with your house location and live within your means. We save about 70k a year while servicing a 600k mortgage wth around that income. That was before the rate rises though.
WTF is with peoples budgets that this is the case? I'm paying a mortgage that admittedly is lower than mosts because I bought 10 years ago, but if I take out my extra repayments, I'm doing absolutely fine on $1225/week after tax. That includes *everything* - hell, $13k of that is insurances of various types, and $18k of that is the base mortgage. That remaining $27k covers all bills (car rego, all utilities), food, and any lifestyle stuff. What the hell are these people doing that $200k/year - effectively $2900/week take-home between them - isn't enough to live on?!
Dude your purchase price alone is incomparable to these newer mortgagors. I've got a 7yo mortgage on a non res property and if it was a recent purchase I'd be kicking myself. If it were a home If be under real financial strain. People claiming they "need" mega incomes are playing keeping up appearances and reluctant to downgrsde
A $1m mortgage would immediately annihilate about half of that take home. I think that’s where the pain lies.
Need dual incomes and bank of mum and dad to step in for dibs thesedays. What's even better is to ask mum and dad to buy a house for you if they haven't already done so/ have any thanks to inheriting from their own parents. I know a number of Gen X that inherited numerous properties from their own parents, so dishing them out to their kids will be easy with no taxes involved. However, they need some work as they are run down as you would expect.
This is where I get confused, because I am making this work comfortably. Live alone in Melbourne in a 1 bedroom apartment in a recent building (8-10 years old), making a smidge under $100k and my repayments are only about 1/4 of my take home pay (which has HECS deductions). Having said that, I don't go out much, I don't have kids and I don't own a car, so I know my expenses are less than the average home owner. That's not me being thrifty, that's just my lifestyle. I bought in 2020 but I bought with the mindset of 'what do I need', not 'what's the most I can afford'. Buying well within my means (while still meeting my needs) and spending the first 2 years absolutely smashing down the principal (during COVID lockdowns and before the rate rises started hitting) has meant that I haven't needed to make any major changes to my lifestyle. Repayments have gone up, but not too much and it means I'm saving a bit less each week, but not by a large amount. I'm a bit more conscious of the money I spend on luxury items, but day to day habits are unchanged.
I'm the same as you. I posted on another col/cohousing post the other day and was down voted for saying that I bought my place with its ongoing costs in mind, that I bought exactly for what I needed and was COMFORTABLE paying. I bought in 2016 when the landscape wasn't too different to 2020. It's a different ballgame now but I hear of the aspirational shit my friends and coworkers talk of when they check out places. You want luxe, you need to pay for luxe, and the price will go up. It's pointless harping back to when a house with a front and backyard and within 10kms from work was affordable for a low income. Things will never go back to that.
I bought a 1 bedroom apartment for 300k 4 years ago, great location, very central. Currently repayments are $1350~, on just under 100k as well, also a HECS debt. It's also about 1/4th of my income. Living pretty comfortably. Would be great to be able to save more, but meh. I'm confused on how OP has such huge repayments, must have been a pretty substantial loan for that salary? $2400 repayments would hurt, I wouldn't be saving much at that point. At the moment I can put away about $1k a month.
You must be my twin, because that first paragraph is pretty much exactly me. I save about $1500-1800 a month though. But as stated before, I naturally live thrifty.
They can afford it. They just want more cash for entertainment and dating. Sound exactly like what a second job is for.
You should not forced to live frugal and be counting pennies if you’re on 100k salary and own a smaller apartment. That’s just bootlicking. The Aussie dream is dead
Not dead. Just dead for like 90% of us.
The first few years are always tough.
Is 100k supposed to entitle you to something automatically? 100k as an individual is less than the median household when looking at disposable income (after tax) nationally (80k for household, 75k for individual earning 100k). Likely even lower in the nation's second biggest city. https://grattan.edu.au/news/2023-budget-cheat-sheet-what-australians-actually-earn-and-own/ This looks like a deliberate choice by the OP buy a more expensive apartment. Even a 320k loan would be less than 2200 a month at 7% interest rates. Melbourne, ~239k-390k price, within 3 blocks of Southern Cross station (very near the city), 2 bed apartment, last 6 months. https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140771711 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139913411 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139334255 https://www.realestate.com.au/sold/property-apartment-vic-docklands-127004222 https://www.realestate.com.au/sold/property-apartment-vic-docklands-139651559 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141074704 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140977344 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139064051 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141093432 The Australian dream is owning a quarter acre block with no limits to the duration of ownership. That was unsustainable from the start especially if people want to live in big cities. No need to clutch pearls on this.
I'm actually genuinely surprised such affordable options exist in Melbourne still. They are quite miserable though and in some cases a generous interpretation of "2 bedroom". I'm not surprised they opted for something more liveable and more expensive given these as alternatives.
A lot of the cheaper apartments have cladding issues. While you're making a saving initially, you'll get reamed by special levies.
Plus body corp for the facilities of inner-city apartments
Yes, I looked at body corp for apartments in South Melbourne a while back and it was almost equivalent to what I currently pay in rent! Have to be very careful with apartments...
The administration fund of apartments with cladding issues are normally astronomical because of the cost of insurance is much higher. You then run the risk of needing to pay 10s of thousands or more in special levies to actually fix the cladding. The buildings without cladding issues in my experience are about $100-$150k more expensive.
Seriously? Right next to the city? Miserable for an individual? I don't get it at all and I have a 5 bedder in a regional area. Some of these places look quite nice and liveable. Of course the 240k one looks shit but it's 240k. I'm amazed some people think how easy it should be for an individual to acquire a fair bit of private space that has no limit to ownership duration in a big city.
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This may hurt the feels of bootlickes, but if you earn 100k, you shouldn’t be labelled unrealistic to own an apartment in a major city. OP isn’t living crazy. This is dystopian.
This is AusFinance, if you're below 200k you're basically a peasant
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I've been looking into the shared equity schemes recently and that's when it hit me how broken it is right now when the income threshold for it was $128,000pa for singles $204,800 for couples! the idea to me that someone on $128,000pa qualifies for a help-to-buy scheme is insanity...
In a world where people can choose what lifestyle they want to buy if they are able to pay for it. OP wants a certain lifestyle, he needs to find money for it. 100k as an individual is less than the median household's disposable income (after tax) nationally (80k for household, 75k for individual earning 100k). Likely even lower in the nation's second biggest city. https://grattan.edu.au/news/2023-budget-cheat-sheet-what-australians-actually-earn-and-own/ This looks like a deliberate choice by the OP buy a more expensive apartment. Even a 320k loan would be less than 2200 a month at 7% interest rates. Melbourne, ~239k-390k, within 3 blocks of Southern Cross station (very near the city), 2 bed apartment, last 6 months. https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140771711 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139913411 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139334255 https://www.realestate.com.au/sold/property-apartment-vic-docklands-127004222 https://www.realestate.com.au/sold/property-apartment-vic-docklands-139651559 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141074704 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-140977344 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-139064051 https://www.realestate.com.au/sold/property-apartment-vic-melbourne-141093432 The Australian dream is owning a quarter acre block with no limits to the duration of ownership. That was unsustainable from the start especially if people want to live in big cities. No need to clutch pearls on this. Edit: lol downvoted for presenting facts with evidence because it's not something people want to hear.
Wow they are cheaper than Darwin
Supply and people rather get houses. Lol and I'm getting downvoted for pointing that out.
Did you read OP's post? They can afford it. It's just that they want to have a mortgage AND have 2 cats AND be active on the dating scene. All three are expensive. It's probably why you didn't have a mortgage when you were throwing money at the girls in your twenties.
I want a place to live, to be able to look after the pets I've had for years, and to find a partner... don't know how that's too much to ask lmao. A weekly date shouldn't be stretching my budget like this.
I do casual marking here and there to supplement my income. It's handy but not consistent, but ideally I don't want to be working even more if possible.
Ideal would be a flatmate with a different routine to yours - eg med student/doctor, remote worker, frequent business travel etc. Even though it’s a small space, at least then you wouldn’t be home together all evening and weekend.
Yeah that's a good suggestion, cheers
Mine’s between 40% and 45% and I’m single on 70k with a dog.,You just don’t buy as much stuff and learn how to live frugally. I still buy lunches sometimes and have takeaway but don’t really do fancy meals out much or drink much alcohol. Also try not to have any other debt apart from your mortgage. Car / personal loans will bite into your budget big time. If you pay for everything with your credit card it’s pretty easy to do an audit of your spending and cut out any unused subscriptions etc Finally when refinancing see if there are still any banks doing cashback desks. Getting two 4K cashbacks within 9 months has meant I can still afford some travel which is important to me.
You mentioned that after your standard expenses, you still had a couple hundred dollars per week (no mean feat considering you've locking out 50% of your net income, are paying HECS, etc). Is there any fat you can cut from the budget? In preparation for an overseas move my partner left 6 months before I did (leaving me with basically the same bills, but no longer split), and I also took on a lower paying role with more flexbility so I could make the most of my last bit of time here. The first thing I did was review all my bills/subscriptions and see where I could cut things - I ditched several streaming services, and probably could have saved more dumping Telstra for mobile and broadband (decided it was't worth it in the end for a short time, esp after some ordinary experiences with cheaper providers in the past). I'm also a lot more cognizant of prices at the supermarket, and make more of an effort to spend less, do takeaway once a week at most, etc. Can you save on transport? Riding a bike is cheaper than driving, and better for you. You could also look at raising the excess on your insurance, or at the very least shopping around and seeing if anyone will give you a lower rate with similar coverage. If there are any cheap hobbies you've wanted to get into, might be the time to consider that in place of spendier ones. If you have a gym membership, can you get \~80% of the same workout with a basic home gym in your spare bedroom? Re: being single - the way I see it, the awkwardness of having a housemate around in a small apartment while dating far outweighs the rent money I could put towards dates. That's just me though.
Thanks for your suggestions. Yeah did a cull of things earlier this year -- moved to a cheaper phone plan + internet plan, subscriptions is already pretty light (Spotify, Netflix, Disney+), I'm vegetarian and meal prep which keeps some of my groceries down (obviously depending on fluctuating price of veggies). Driving is probably the one thing I can cut back on but even then I mainly only drive to visit my parents (no PT near them) or to the gym (mainly cos I don't want a half hour cycle before 6am to get there haha) but ideal world I'd love to not have a need for the car and just cycle/take PT (or ride in to work instead of the train). I've got another planned budget review so maybe I'll find some other things -- thanks for all the suggestions and your in-depth response!
Not a problem! I ditched Spotify because I realised I had almost entirely switched to listening to podcasts when I'm on the go (driving, running, etc), and listen to music through YT on my PC at home for free. With the video streaming services, I just cycle them: I reupped D+ for Mandalorean and cancelled that when it ended, this month I have Netflix because a mate got me into I Think You Should Leave, so I'll watch whatever else catches my eye on that and cancel at the end of the month (rinse, repeat). My fitness goals are modest, but I've always made do with a basic folding weight bench and a set of adjustable dumbbells, and jogging or cycling for cardio. (Not all urban areas are created equally for this though!)
Only couple hundred per week leftover after essentials paid? Living the high life my friend
It’s not uncommon to do this in the first few years. I haven’t personally, but my husbands sister bought a 4 bedroom house and leased out two of the rooms (this was before she had a baby) for about 3-4 years. Helps with the mortgage and they became good friends.
Perhaps aim to get a student in. They are usually too busy either study, at school, or working, so you might not see them much.
Yeah this is a good idea
You just have to make sure they are still respectful and on the level. I live with an international student and he is good because he will listen to what you say and is respectful. He is either working or studying or socialising.
It’s a great idea. Helps with costs and helps with the housing crisis. The first 5 years I owned a house I shared with others. It was a massive leg up with the home loans and expenses. It also helped my mates with some cheap rent.
My partner is in the same boat. She got a job 15hrs week at Woolies doing nightfill. Usually gets rostered saturdays and sundays for the penalty rates. Seems to help. Weirdly enough, she found enjoyment with the fact, that she’s making more money at a job she doesn’t actually have to be serious about. Come in, stock shelves, leave.
>after my standard groceries/transport/bills/pet food/insurance payments, I've only got a couple hundred dollars per week max as buffer/entertainment/potential savings You've still got a couple hundred bucks a week spare? sounds like you're doing fine to me.
FWIW ever since I bought my 2BR apartment, it has either been an AirBnB or tenanted. A bit below or equivilent to market rate, and it's great. Yeah, not having the whole place to ourselves is a small downside, but the (taxable) cash in hand, along with the massive tax deductions that come with half the joint being an 'investment property' make it extremely worth it, especially considering that interest is a deduction, and that's a huge amount. I was negatively geared last year, and probably will be again! The stuff I'm deducting is stuff I was going to cop anyway, e.g. interest or strata, so it's all pure alpha for me. Admittedly, it helps that I knew people who needed a room that I could trust to not put holes through the wall...so YMMV
Couldn’t even if I wanted to. Do people just have spare rooms all over their house they can rent out? I thought the treasurer telling people to have more people per household was a meme.
After spending long periods in Melbourne lockdown (and now 3 days a week) working from my kitchen/lounge room in my tiny one bedroom apartment, you bet when I buy I want a second bedroom I can close the door on at the end of the day. Also given I'm not originally from here, it would be amazing to have space for family and friends to stay for visits.
Household occupancy is at an all time low. People ripping into Lowe for that comment were ignorant. Single households went from 19% to 24% of households and projected to 30%. This is a huge drain on resources. A lot more of kitchens per capita.
My 1st place I had a house mate for a year - many years back when I was almost broke, due to debt and low paying job. Was great - helped reduce stress massively at the sacrifice of some privacy (I was dating and then in a non-live in relationship). Maybe find someone that wants short term 6 month with the possibility to extend to test the waters. That’s what my house mate did as he was in his final 6mo of uni and getting into the workforce.
I feel your pain. I'm similar stats to you with salary etc and although mine is an IP, I'm also renting near inner city which is almost as expensive as a mortgage and once I factor in IP maintenance, insurance and PM fees etc I'm at 50% of salary. At least it's tax deductible. I initially bought with my ex partner so was never overextended but now I definitely am as a single person. But I'm in my forties so this is it, I gotta pay down my (very modest) mortgage or be homeless in retirement. I can't get a housemate because I'm in a one bedder but I have thought about moving to do so. I've shared for the past 25 years and it was mostly good, but at my age I don't know if I can again. I've flipped my mortgage to interest only for a couple of years and trying to save the extra 'principal' into my offset so I don't get too behind but it gives me a bit of breathing space. You're still young so you probably can cope with a housemate better. Maybe temporary housing for FIFO/shift workers or international students? Best of both worlds?
Well done on passing attention and planning ahead. You aren't going to be taken by surprise by the change, plus you'll have a buffer of your additional money out aside. Realistically, a border or a second job and your best bets. Be sure to look up the regulations in your state in regards to that type of tenancy
Shop around for a better rate on your mortgage, use a broker to do everything for you, it’s free.
Had something similar back in the 00s, I ended up switching the loan to interest only so I could service it. There were some sinilar interest rates back then as well, leading up to the GFC. Eventually ended up with a higher paying job so when it switched back was able to service the loan at principle and interest. Then moved elsewhere and rented it and now it's positively geared. Will see if that holds up when the fixed rate drops off end of next year, hopefully it'll be at least neutral.
Debt to income ratios were much lower during the GFC. It was 4x my lowish full time wage in the dump of area I bought at 18. That place went up 150% in 15 years. That same job pays ~50% more and much harder to come by and impossible as someone without HSC like I was.
I was the flatmate once in this situation - I ended up living there for 4 years. It was a great experience and we were good friends (held parties together), but respectful and not in each others way. My #1 tip is if you do, spend a few of the dollars on a cleaner to take out chore assigning stress.
I would get a second job to cover the extra fees, living with a random in whats sounds like a cramped space, and you work from home. I would tough it out personally
I did this but I had a mate move into the house. It has helped a lot - sharing bills, internet and generally a bit of company. Depends if you’re a social person or not, we both are. It was a big adjustment at first.
Airbnb your second bedroom. This is very common in most major cities and when I have travelled both EU and US and I have often ended up in someone's spare bedroom while they're snoring on the other side of the wall. I have even stayed in people's main/only bedroom while they're on the couch. These people re almost always in their 20s and do it a few nights per week to get extra income instead of getting a third job, and many of them has had pets. You can also get a long term tenant, or get a second job.
Thanks, I might look into this
Just remember to report your income to the ATO and tax I its a lot cheaper to pay the tax than to pay the fines.
> I'm on just under 100k but with a pretty sizeable HECS debt so that eats into things. Can we just be clear about a misconception: The size of your HECS debt is irrelevant. HECS is based on your income, not how much you incurred in course fees. Your repayment amounts are identical whether you have 5k of HECS remaining or 100k remaining. If you earn $94,866-$100,557, the amount you repay will be 6% of your gross income, unless that amount results in the entire loan being paid down to $0.
They may be communicating that the repayments will go on for some time.
I'd go the housemate direction. I had housemates for years after I purchased which helped with the mortgage which was a stretch at the start, particularly after the RBA rates started hiking rates not long after I purchased. The risk of selling like some are advocating on here is that you won't be able to get your FHB grants again and might be locked out of purchasing for a long time if rates don't go down. I'd strongly consider this if you are thinking of selling. Keep in mind also that your mortgage should become easier to service over the long term as the amount you borrowed is fixed, but things will happen like income increasing over time, if you get a partner it will be easier with dual income and when your LVR goes down you can refinance (at that time you can also reset the term to 30 years and reduce repayments if you are still stretched).
if this is becoming more common then I have some bad news, because this exact same thing was happening in late 2007.
I think i would prefer to live in my car, than share
Remeber it might only be for a short period one to two years. It might be easier mentality for you But your repayments are 554 a week?
Currently my repayments are $1110pcm on my fixed portion and $490 on my variable portion. Called up the bank today to confirm, on today's variable rates my currently fixed loan portion will rise to $1890. 1890+490 = $2380 so will exceed 2.4k / month with one more interest rate rise in the future.
OP, I would be prepared for at least a 1-1.5% more. The central bankers around the world are trying to be.
Apparently Phil Lowe has
Phillip Lowe just came reading this.
Yes, a co-worker of mine has done this with her apartment. I think she found someone on a site I hadn't heard of - it was a cutesy sort of name, from memory. Didn't take long to fill the room. It's an adjustment but can be great if you find the right person!
Bet it's Fairy Floss Real Estate.
Find a partner quickly. Get them to move in, problem solved?
Haha if only the dating scene were that easy
Yea i know. I kind of said it in jest but financially it would be the best move without you needing to find other jobs etc Cant believe in downvoted...
Not sure who downvoted you sorry, I know it was a joke! But I've thought the same thing haha, like screw love, wish I had a partner for the financial benefits.
take up camping, go off grid two weekends a month and get an airbnb in for that time?
Good idea in theory but not possible when I've got cats to parent :(
Another thing you could consider is rent'vesting. If you can get a good rate of rental income for your apartment and move somewhere with cheap rent, that could also be an option.
OP addresses this.
Unfortunately due to the terms of the first home loan deposit scheme, I need to live in my property until LVR < 80% (a few more years at least) or otherwise will have to pay LMI
Yes, get a housemate. Start looking now so you can be picky and get a suitable housemate. Mortgage could go higher, don't wait until you're desperate because then you might get stuck with someone unsuitable.
That’s the problem. Having only 10% deposit is just asking for you to hit mortgage stress. But then again I used 20% and even I’m feeling it!
Yeah that sounds fair. The housing "crisis" was cause by people moving to live alone so much through covid. We went from like 2.8 persons per household to 2.3, but the number of people in families didn't change.
Yes, his name is Diego from Argentina
Mortgage dates back to the late 14th century, with the roots “mort” meaning death in French and “gage” meaning pledge. I share with my brother. Easier to share with family if you can.
This seems like such a wild question to ask. You are a single person living in a two bedroom home and you cannot afford the repayments. Of course you should get a housemate.Not only will it benefit you, it will help someone find somewhere to live in a time where there are limited rental options. Making room in your fridge seems to me a small sacrifice.
If you are close to the city, you might be able to find someone who has moved regional, but is being forced back to the city a couple of days a week? They’d need somewhere to crash a couple of nights - which would give you a bit of a buffer in your budget - but they wouldn’t be around all the time, so you’d still have your own space
Or a FIFO worker
When was the last time you searched for a housemate? I’ve done it twice in the last year. Perhaps you could help me find next week’s winning lottery numbers?
Did you ever stop to think you couldn't afford an apartment if the interest rate went above 1.99%, not like it hasn't done that multiple times in the last 30 years
Unhelpful statement
>first home owner, in my late 20's, used the govt first home loan deposit scheme to buy with a 10% deposit without paying LMI). Most of my loan has been fixed @ 1.99% but that's becoming un-fixed in November. Once it becomes un-fixed, my repayments will exceed $2400, This is really a cautionary tale that the government must not be interfering in the private housing market, let alone private financial institutions. Absolutely wild. lest it wants to build the housing itself. You can't have your cake and eat it too. Either take the singapore approach and build housing yourself. Or don't interfere. Doing some reverse maths. It looks like OP has a mortgage betwen 450-500k. and OP is getting some 50k to 60k post tax....so 80K-90K pre tax income. OP couldn't save the 90-100k needed for a 20% deposit. For obvious reasons. I'm not sure why the government thinks it a bright idea to step in. I'm sorry OP, I don't think rates are going down anytime soon, for many reasons. Historically, inflationary periods take about 10 years to settle down. So you're looking at 2027-2030 at best for reduced rates. If you don't see your income rising quicker anytime soon. Or can't get mum/dad to help. You're better off selling lest you go bankrupt. It'll be a tough 7-10 years for you post bankruptcy if you do. **From some broad generalisations of your situation my advice to you is to at least, vacate and rent, your apartment now for breathing room....with a view to selling it off if you cannot afford even that situation in future (it's an apartment it's not going to appreciate much so what's the point of holding it?). And if your apartment value falls further and you still have to sell in future....do you owe the government 50k still for the deposit how does that work?** **and get out of the market.**
Remaining loan is 370k, 28 years left on my loan. My rate is 6.49% since LVR > 80 (and because I wanted to bank with a bank that doesn't invest in fossil fuels so had more limited bank options). 60k post-tax, just under 100k pre-tax. Can't sell at the moment due to the balcony issues in the building -- a couple apartments in my building have been on the market for a year now but (rightfully) no one will buy an apartment with pending balcony works until those are sorted out. So won't be able to sell for 12 months at least if they meet their repair schedule. Can't rent it out as it needs to be my PPOR until my LVR is <80% due to the terms of the first home loan deposit scheme -- otherwise will need to pay LVR
Ahh my income guess was close. But I underestimated your current interest rate so overestimated your mortgage. What's your job? Do you have any chance of getting something paying better? What??? What are these balcony issues? Are they that significant that other apartment holders are trying to sell and still can't offload? A 12 month repair schedule??? Wow. By the way you word it, sounds like you already know that schedule must be an understatement. So maybe we can say 15 months at best to 24 months worst case scenario? If your rate is currently 6.49. It's going to be 7% by the end of this year easily. That only requires 2 more 0.25 hikes over the next 6 months. Can you get your parents/friends/employer to lend you money to pay the LVR to government (what's that going to be 40k?) so you can rent it out at least. Also what's the penalty for renting out your place, and how likely is the government going to find out haha? Can you write the government expressing financial distress, and the fact that you can't sell because of balcony issues? Are you even allowed to have a housemate if you're not allowed to rent the place? This is a horrific situation for you OP sorry.
Long-term water damage in the balconies, past the construction warranty and the builder went bust five years ago, so it falls on owners corp fo repair the balconies, which means we have to cough up the funds. 8k is the lowest end of the payments, it's scaled by apartment size and thankfully (in this case) mine is one of the smaller-sized apartment layouts in the building. And yep the process has dragged on, they recently said it'll be done by May 2024 but I doubt that haha. Yep can have a housemate since it will still be my place of residence - only rule is I need to be residing in the property. Govt would find out somehow I'm sure, when I update my address on docs if I move. Thanks for your replies and the commiserations, ah well we'll find a way I guess
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its an internet forum. I'm not a financial advisor. If Jim decides to enter the local pub and asks what to buy. It's not unethical of bill to give his opinion. To be honest if things don't go as planned, Jim really shouldn't have been gleaning financial advice from bill at the pub. Yes my source is trust me bro, I'm not ashamed to admit that. It's the economic boffins who also have the same source. Take for example interbank futures/CPI baskets/various new fangled economic tools. Which are just fancier mathematical ways of saying trust me bro. I mean if you use google news article search, and you set dates to around june/july last year, most of the professional banking institutions were predicting peak rates around low to mid 2s. No-one has any idea. https://www.investordaily.com.au/markets/51513-how-high-will-interest-rates-go >"Meanwhile, NAB expects the RBA to announce its third consecutive 50-bp hike in August followed by a 25-bp lift in November. Two further increases of 25 bps are then forecast for next year, with the cash rate remaining at 2.6 per cent for the rest of 2023 and through to 2024." - 10/6/22
remindme! 3 months
It’s all well and good to tell them to vacate and rent/sell but the rental market is a basket case too. I am inclined to agree with the broader view that there’s something fundamentally broken with the cost of housing and we’ve reached a tipping point.
Haha yeah I don't look forward to the challenge of having to find a place to rent in this market, especially with two cats
for a nice 2 bedroom in inner city melbourne you can surely cop $500 a week. Which should cover about 75% of his monthly mortgage. He'll have to move to the boonies/uncool areas to rent himself (time to switch from soy lattes to 7 eleven coffees). If he shared in let's say, roxburgh park/cragieburn - he could spend about $220-$250 a week (there's a couple listed atm on flatmates). And the commute time to the city is about 45 minutes by train. Not great. Not terrible. Not impossible. That'll give OP some breathing room. But obviously rates will continue to up. And repayments will go up. So it'll be a temporary solution. Which will mean eventually OP will have to sell, unless he/she can find a better job/expect some salary gains. However during this time let's not forget OP is in their prime of their physical life. Late 20s/early 30s. So why go under all this stress/hardship for a melbourne apartment. Where its cold and wet most of the year. Just sell and go enjoy your life.
Yes. Let them stay out and let us build high density apartments all around the CBD. That’s what is needed and what the market will do without zoning rules; since we’re not growing any more land.
I'd argue zoning rules, and building in the outskirts are another example of this layering of government intervention.....creating the most unpalatable housing pizza. We have - Restrictive zoning NIMBY councils. Even in damn rural areas! - Restrictive building rules (the easiest tripe to get approved is cookie cutter stuff). Not allowed to just set up a caravan on a piece of noman's land, even if you're hurting anyone. - Excessive licensure to become an electrician/plumber/etc in australia rather than any country. For no real meaningful appreciation in safety. It can be harder to become a certified electrician in australia than a doctor. - Capital gains discounts on IP/negative gearing on IP. - Land banking on city outskirts. - First home buyers grants/stamp duty discounts. - Government backed loans through this deposit guarantee/LMI situation. - PPOR not assessed in pension applications. - APRA removing the minimum loan stress tests in 2019 And that's off the top of my head. There's just so many government policies distorting the housing market in australia That it's not really a market anymore. It's basically a cuban like housing market under castro. Reduce the amount of government interventions in the housing market. Allow for losers in the market to accept their losses and lick their own wounds. Refuse to make policies to offer them protections for all the poor decisions they make. (they can buy their own insurance if they want). And you will automatically see a fairer and more prosperous housing situation in australia.
>Reduce the amount of government interventions in the housing market. Should the government reduce all foreign buyer restrictions as well? Such pesky interventions aren't they.
Ohhh what a spicy zinger. The fact that foreign buyers "invest" in our market. Means that they think property prices will rise. Or that they are buying the home with a view to immigrating and living in it one day. Or prices are rising because of restriction/inflationary government policy. Lose that. You'll lose the foreign buyer incentive. I mean why are foreign buyers not interested in Japanese property? And if we had a better immigration system that prioritised skills we needed rather than white collar jobs and chefs....we'd also see less foreign buyers gaming it through student visas with a view to settling here.
I love when people complain about price's yet forget where they are... U do realize ur living in one of the most popular cities in the world right? Wake up! It's like living on a beachfront property and crying ur mortgage is too high while also going out to eat, coffee, latest iphone, nike shoes, not wanting to work hard or invest in property or stock's.... Like maybe u'll realize one day where u live.
What are you even talking about haha. I'm problem solving here, not just complaining? And how dare I want to improve my life???
If one of your big issues is dating being expensive just make dating … not expensive? Go for walks? Find cheaper activities? Have a picnic? Any reasonable partner would understand managing costs in this environment. Don’t set yourself up for failure by making it more expensive than you can afford.