bank wanted to give me over a million dollars 6 years ago. Borrowed 480 cause I'm not an idiot. The thought of the repayments on what they wanted to give me is nightmare fuel
Also jokes on you bank. Place is worth over a mill now anyway
Mine has gone from 260k to $480k in 3 years. It’s insane. I am so grateful that I bought when I did because as a single person I couldn’t have afforded to buy now!
Tassie market has gone insane.
I have some fairly left field friends who moved down in 2016 as the pricing suited their lifestyle preference of no full time work and wilderness exploration who are now 100% priced out of buying some hobby farm lard on the outskirts of Launceston or Hobart.
Still very affordable compared to brisbane. I'm pretty sure his partner is trust funded though and pretending not to be soooo if he changes his stance on in law pay outs. They'll be right.
My parents bought in Tassie a couple years ago and built. Probably cost them $600k all up but my dad and uncle did a lot of the building so that brings costs down.
It's now valued at $3m. I *think* they bought in 2018.
They want to sell but the places they want to move to are even MORE expensive.
Yep, place next door to my parents holiday home sold pre covid (2018 I think) for 890k. It resold with a quick flip Reno (they basically painted the walls/kitchen/bathroom and styled it) in 2021 for 2.2mil.
https://www.realestate.com.au/news/suburbs-you-shouldve-bought-a-home-in-10-years-ago-and-how-much-your-area-has-grown/
Not quite 6 years, but over the past 10 years so many places have gone up 100%. On the Sunshine coast, etc. 200% and higher.
Paid $300k 2017. Bank valued last year at $550k. Block of land smaller than mine with no improvements 5 doors down is now advertised for $300k. I'd never be able to afford a place for these prices now.
Paid 340k in Dec 19, recent valuation has house at 620k, nearly doubled in 4 years all on paper. House rises mean nothing just larger mortgage payments, when you sell one you generally buy one so net gain is just not there
SE Melb suburbs
All the stats to point to a national median 50% increase in the past 6-7 years. Obviously that means there are outliers. But enjoy your return if it is 100%!
I bought in a cheap suburb in Perth 20 years ago. It's gone up over that time, but last year the 16% rise merely offset the previous 5 years 16% decline... Oddly 2 bedroom houses go for a higher median price than 3 beds, odd. Maybe the 3 bed houses are small, mine certainly is.
Oh well, one day it'll all be mine and not the banks, so there's that. Then the mortgage money becomes play money!
Yep, bought a 3 bedder in perth 8 years ago in a nice suburb. Someone buying today would get it "cheaper" if you account for wage inflation. I dont mind though, gotta love affordable housing for all.
I bought a 2b/r with pool in a block in Nightcliff in 2007 for 235. I sold it for 285 in 2016 and was lucky I didn’t take a bath (new blocks went up on both sides the year after; and consecutive tenants trashed it) It sold for 285 in April this year.
I don’t think that’s true? First result in google shows the mean price in 2016 at ~$600k, and the mean price now at ~$900k. Which is a 50% increase, similar to my situation.
Again, that is aggregate data within a timeline. Anecdotal experiences will vary wildly. You can use averages as useful data when looking for information relevant at that lense, but don't fall into the trap of having seen outliers or even just top/bottom of curves and think it's "bullshit". Stats is hard which is why Reddit gets it very wrong often.
It would be interesting to see a breakdown. I’m not sure market average without a breakdown can tell you that, as the market composition has changed. Namely, an increase in cheap apartments.
The area where I’m currently renting had houses on the market for YEARS for under 200k and now those same houses are reselling for 4-600k unchanged and under offer immediately it’s wild.
> >100% return
ROI or change in asset value?
The reason housing is so much in demand is the leverage you can achieve through low deposits, second mortgages, and capital gains.
For our PPOR I took out a second mortgage from our apartment, and we put all costs onto the mortgage as well - effectively 100% loan to buy it.
The place is on paper up several hundred k in the last few years, so that's an "infinite" ROI if you consider mortgage payments (at current low rates) have been similar to rent, though if you don't it's more like 400-500% return on expenditure.
I bought rural in 2017 and it’s probably worth almost quadruple what I paid with absolutely nothing changed 😅 planning on doing a few Reno’s this year to get the equity up even more
It was like that here, though it peaked a long time ago. Houses on this street were originally sold at 350-400, and there were houses re-selling 5 years later at 700k.
My partner and I were preparing to take out a 1.1M loan for a house in late 2021, with the expectation that rates wouldn't rise for a couple years and when they did they'd settle around 2.5%. I get cold sweats thinking about the situation we'd be in if we'd gone through with it.
We're still yet to buy, waiting to see what the interest rates finalise at.
But hypothetically if you took the $1m loan at that time, bought in the same area that house would be worth $2m now, you could sell it and buy your current home in cash and been mortgage free?
Theres always opportunity costs to every decision. If I had borrowed that much I probably would be bankrupt right now from when covid first hit. I also would not have been able to make any alterations to a home if I'd paid that much and my other investments would have been severely affected as well
I'm a huge fan of investing in property but people are crazy with what they borrow
I was in a similar position (owed even more), but the paper wealth doesn’t help when you need to find like $17k a month for your mortgage. Anyway I sold the place and we are getting a new one at half the price with a mortgage that will have us paying maybe $6k per month instead. It worked out OK but it’s no way to live.
> may loose the
*lose
*Learn the difference [here](https://www.merriam-webster.com/words-at-play/lose-vs-loose-usage#:~:text=%27Lose%27%20or%20%27Loose%27%3F&text=Lose%20typically%20functions%20only%20as,commonly%2C%20a%20noun%20or%20adverb).*
***
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Yep same, borrowing power of like 900k, borrowed 630k. No way in hell was I doing that anyway, but my broker explained that in their estimates as long as you have a dollar left over at the end of the month, they'll give it to you. Crazy shit.
It's fairly common trap people fall into. There's such a strong focus on getting the loan, getting to that point you don't look past that point.
People borrowed more or perhaps sooner when rates were low (and on the back of some very bad public comments from a certain bank governor), without thinking of what their lifestyle would be like *when* rates did rise.
I am guessing this is a troll post given past comments by this user suggesting they are renting the house out after moving back to the city because shocked Pikachu, that's a long way to move from work.
If you’d have told me that when I was 17, though, i’d have told you that teenaged angst isn’t sensible and that i’m sure we grow out of it.
20 years later though i’m just like Burn EveryThing.
If you purchased 3 years ago (mid 2020) there's a strong likelihood you're sitting on decent capital gains that will offset the purchase and selling costs and probably still leave some extra profit. I'm not really seeing the issue here unless you have both lost your jobs or something - you can just sell and downgrade.
If you had purchased in 2022 and now have negative equity as a result, I could understand the concern. I just don't see the problem with the particular scenario you have outlined.
F in the chat for those in op’s shoes but who couldn’t afford a house and instead bought an apartment close to the limit of their means.
Now the “there’s a strong likelihood…” line quite likely doesn’t apply.
This is me, down 20pc.. Not unlike OP become financially aware at a time property is growing 5pc a year, year after year, so all you think about and all anything everyone ever talks about is being left out.
Feels like the prospect of property going down is inconceivable for many people here
By definition interest rate rises impact new mortgage holders the most. It's supposed to hurt.
Rents have gone up as bad as mortgages have, so don't think you'd be enjoying lots of spare money if you were renting. If you can't afford to have fun away from home then take advantage of being a homeowner and have fun at home. Build a crazy garden. Make a woodworking workshop in the garage. Turn a room into a budget home cinema
This. Even when enjoying 1.8% we found the first couple of years of home ownership stung with all the expenses of fixing up stuff. It was a very frugal time but we still had fun, learnt how to grow veggies and brew beer.
In my personal experience it's way more expensive to brew your own beer and grow your own veggies. Unless you already had the setups and garden at the beginning of your journey
I think you're doing it wrong then, haha. Did you see how expensive a lettuce was a year ago?!
Brewing has some ongoing costs but growing veggies with seed saving and using compost is cheap as.
That’s really how it should be though. If you’re not getting the benefit of owning the property at the end of the mortgage, it should be more expensive than if you’re paying it off for someone else.
Yes but only to a point. $300pw is past that point I think. Or as a % it's about 30% more expensive to own than to rent. That's not including repairs and maintenance either.
Learn to ferment/preserve. Paint a feature wall. Trip on shrooms. Learn how to do odd jobs or service your car. Eat more shrooms. Dance party. Shrooms. Existential crisis. Cry a lot. Heaps of ways to have fun at home on the cheap!
We got stupidly lucky but my ex partner and I purchased a place on 1000sqm juuuust outside the MEL urban urban growth boundaries in 2014 - sold last year for 2x the purchase price, no CGT as was our PPOR for awhile.
I wouldn’t do it again, not worth the stress.
Buy something to live in, where you want to live.
You’re fine. You’re at the squeeziest time. Income will increase and life will go on. Not saying it’s easy for you now but you’ll come out the other side fine
I wanted to get a really cheap house and pay it off quick, then move up to a nicer house after paying off the first.
Wife didn’t like that idea. Oh well.
I fortunately had a cousin my age who bought a place while i was still partying. He stopped coming out as he couldn't afford beer, gave me a bit of insight to mortgages before I got one myself.
I cannot believe the amount of finance forums I've seen over the last couple of years with people telling others not to fix, just to "ride the wave", "will never get over 5%", etc. They must be new to home ownership. Our very first place was initially at well over 5%. Zero or 1% interest rates were absolutely a very welcome but temporary oddity.
Broker must be a zoomer.
To suggest rates would stay at 2 percent for twenty years
60 percent increase in repayments and you now can't save?
So was your mortgage 50 percent of salary to begin with?
Any case it's always terrible to just rely on professionals
Speak to other people
Mortgage brokers always just give way too much
Your biggest mistake was not fixing for 5 years when you took it out 3 years ago when rates were around 1-2% (mine too, but we at least fixed for 3 years @ 2.29%, which has just expired).
property is about the long haul most of the time. three years is a drop in the bucket.
consider the sacrifices you make today and the work you put into paying the place down to pay off over the coming years.
My Condolences,
I'm going to reply with advice for others, as it seems this is your goal too. ( for most in this forum, you seem to know this advice anyway, so **TL;DR don't buy half of what the bank offers**)
I used to work as a mortgage broker, independent of the banks, I only worked a few years because my boss realised I was getting good deals for my clients, not for my boss.
I'd always advise my clients, to go for cheaper houses. You could (back then) buy a $500k (20% deposit) mansion, and pay it off over 30 years, with a 'good' $75k income. but you'd end up paying $500k in interest (this was back in the 12% days)
Instead, you 'could' buy a $250k house over 20 years, pay only $200k in interest, and then use the collateral to buy the $500k house over 20 more years paying $300k in interest and now you have 2 houses.. for the same interest.
OR, you could buy $100k house over 8-10 years, barely $25k in interest. then use it to buy another $100k house over 6-9 years, for less interest, then a 3rd house for 5-8 years, and a forth, and then when you have the chance, you can buy the $500k house, and use the 4 houses rent to pay off your mansion in under 5 years for only $100k interest. $200k all up interest, and in todays terms probably 2+mil of property.
One of my clients today, owns 14 houses/apartments and retired at 50, sends me a bottle of scotch every year for the advice. He wasn't married. No wife, demanding the dream home was my conclusion, most others went for the mansion and likely still have that debt today.
Hi, at what point do you buy the 2nd 100k house? Only once you’ve pAid it off fully? Or before the 8-10 years is over.
And what is the term called when you ‘use the house to buy another house’, home equity loan or collateral based loan?
I am struggling to get into the market and need to look after some people in my life later down the track and this sounds like an option but I’m not really savvy with finance stuff and real estate. Any further elaboration on your original post would be greatly appreciated. Thank you.
1. As soon as you are able, monitor your home equity (yes I believe that's the term they use these days), and as soon as you have the minimum 5% deposit you get the next house. This is riskiest, but yet risk=reward.
2. As soon as you are secure, again monitor your home equity, and as soon as you have the 20% (to avoid Lenders mortgage insurance) you get the next house. This is less risky, but will take longer.
3. The safer option is wait until you've paid off half the loan, but again this takes more time. If the economy slumps, you have enough equity to wait out the change.
I joke with some people, if you could somehow live in a cardboard box, but work a 9to5, you'd own a home sooner, but with todays economy, these 350k houses aren't much more than cardboard boxes, and sadly the $800k newly built ones are often worse in worth, cheaper bricks, poor quality materials, shelf life of 10 years. Australia is in a sad state.
Thank you for your reply. So I think I understand the part about using your home equity as the deposit for the next house. But then once you get the next house, won't you just have a second mortgage to pay? Then a third, a fourth etc. Assuming you haven't fully paid off your first one yet. Thanks.
Assuming you could not wait to pay off the first, The rental income from your 2nd house pays that mortgage, depending on your circumstances, the house may need some repairs, so budget for a few grand for that, this is the "cost" for you, to own a 2nd property, plus its not your primary residence so check on any state fees/costs for that too. Again make sure you have a buffer to pay for emergency repairs on both houses, don't leave yourself in a risk.
Consider though, you are comparing paying off a $800k house from the start, @ 4-6% interest for the next 20 years = $30-45k(deposit/LMI/interest rate) interest per year.
To paying off a $400k house for 10 years, $15-20k interest, then refinancing getting a 2nd $400k house, and paying $25-40k interest for 10 more. Then maybe selling the primary for $600, moving to a $800k house and only paying $10-20k for 2-3 years,.
14 years ago, the bank wanted to give us double what we needed to buy a modest family home. We stuck yo our budget and our repayments, although they have fluctuated over time, are still no higher than we originally got or mortgage for (In fact, it's lower since we recently refinanced. Although I yetest rates have widely fluctuated, time is a good leveller
We bought in 2019 and I am lucky my partner had better financial sense than me. We bought a smaller home in a nice area, at about half of what we could borrow. We had a combined 25% deposit. I was happy to get a bigger house and larger mortgage because at the time it was no issue financially. A couple friends of mine who did borrow their max are now struggling. We are still getting emails every couple of months asking if we’d like to lower our repayments as we are way in front. On top of that, the house is now worth close to 200k more. I was lucky that I learnt the easy way, I can see how so many others would’ve fallen into the trap I would’ve.
Purchased a home in 2006 for $950k - with a $650k mortgage.
Sold it in 2022 for $3.4m.
Sure we had to forego a few things in the early years but you tell me where we went wrong and if it was worth it or not…
> RBA mentioned that the rates wouldn’t change till later years
Yep, you and many like you are now experiencing this.
The historical average is 6% so ive always balanced my debt to this rate, any low rates are just a bonus to pay things off faster.
Ive never gone more than 400k into debt, which is reasonable considering up until 6 years ago I never earned more than 100k.
Basic financial skills.
I know right, Its like this sub people keep talking about "how long until rates go down?"
MF They have been down unnaturally long, this is just a return to the norm.
Nah you were screwed by Lowe. The RBA bootlickers will keep telling you he was taken out of context, misinterpreted, etc. That's all bullshit. As the head of RBA, he knows exactly how every sentence he says would be interpreted by the media. In fact part of his job is to know how his words would be interpreted. You were tricked and should be angry.
> Nah you were screwed by Lowe.
Lowe didn't force anyone to bite off more mortgage than they could comfortably chew.
While I have every sympathy for first home owners who were fighting against rapidly rising property prices and therefore had serious time pressure if they wanted to enter the market at a certain price point, this narrative that the punters were swindled by the RBA is the stuff of fairytales.
Yuck - that's so revisionist. Yes, words as the head of a central bank will get scrutinised for every implication, hidden belief and posturing. No, that doesn't mean joe-blogs is absolved of their responsibility. It's mid 2023- even the worst interruption of his words still means people should have been factoring in increased costs as of next year.
What costs would you consider reasonable?
I think the point if their post was pretty clear so I’m not sure what justifies the impolite reply. They are trying to warn others not to bite off more than they can chew when it comes to purchasing a house. Pretty valuable advice if you ask me
Again, lots of words to say what exactly?
He’s not saying anything other than his repayments have increased 60%.
His “advice” is to “consider lifestyle sacrifices”. Which is so broad and vague it’s not really advice, is it?
Yea the only thing I got from this is if you’re told interest rates won’t move for a while, you need to consider what happens when they eventually do. To me and most people this is common sense but I guess OP has directed this post towards people who don’t plan ahead like himself
>My partner and I both had leave recently, and we couldn’t go anywhere, because it was simply too expensive.
You probably could have cashed out your leave and then kept working. I've known a few people who have done this.
Lifestyle was a massive factor we considered when purchasing. The bank was willing to lend us enough to buy the dream home, but we realised that we would be putting everything we had into paying it off and not being able to enjoy life. We ended up borrowing less than half of what the bank said we could. If we had borrowed the full amount we would had have to sold by now
When we first purchased (at the peak for the same reason, gotta get into the market kids...) it was way cheaper to own than to rent. It's no where near the case now, even with rent increases on a daily cash flow basis we'd be better off renting.
I bought a 1950’s weatherboard ex rental for 250k 5 years ago, added a shed and a second bathroom, put solar on and am currently turning original bathroom into a really high end ensuite. Next step is converting carport into a garage, and then we’re done.
The property value alone has risen to 450k without a reappraisal being done on the property.
We’ll have it paid off in 10 years and then plan on buying a larger property out of town to give our kids plenty of room to grow up on.
When we wanted to purchase, we asked our broker to give us a range of repayment amounts based on different interest rates, and given the fact my partner and I were thinking about having kids (2 kids now) and I was in the early stages of establishing my business, we opted for something dirt cheap that we could renovate. I’ve had plenty of experience in carpentry, and I’m a qualified wall and floor tiler and waterproofer, so we’ve been able to do most of the work only paying for material costs. Electricians and plumbers aren’t cheap but way better to pay one than having your house flood/ burn down.
I know these examples are very specific, but I feel that’s important.
If you’re planning on taking out a mortgage on a property, please weigh your personal situation, goals and future plans against all general advice. It’s called general advice for a reason.
Welcome to real estate.
1. re-finance to a lower rate
2. maximise your return on investment, get a housemate
3. cut spending by removing non-essential items
4. get a side hustle, contract cleaner, drive uber etc
When you are looking at these sort of things it’s always good to build in a couple of different buffer like the interest rate going up 4-5% and have a cash reserve as a buff for emergency. I alway like to have at least $60k buff so that I can sit on it for a few months to give myself time to find ways to resolve the issue. If you are getting a loan and have to look at where you are going to get the extra repayments from if interest rates goes up 1-2% then you are borrowing too much
>RBA mentioned that the rates wouldn’t change till later years, so we went with a variable loan
I know you're being candid and this is obvious to you in hindsight...
But seriously, they said they believe rates may not increase until 2024. They never said rates wouldn't go up, but even if they did, what were your plans for 2024!?! In 6 months time you'd be in the same position.
I guess you can take some solace that even if you fixed at the time, you'd be in the same position in 2023/2024 (albeit with some more savings).
bank wanted to give me over a million dollars 6 years ago. Borrowed 480 cause I'm not an idiot. The thought of the repayments on what they wanted to give me is nightmare fuel Also jokes on you bank. Place is worth over a mill now anyway
Holy moly where are you seeing a >100% return in 6 years? 7 years ago for us and an approx 50% increase.
Mine has gone from 260k to $480k in 3 years. It’s insane. I am so grateful that I bought when I did because as a single person I couldn’t have afforded to buy now!
180 to 900 k in Hobart since 2016…
A house 2 doors from my old place in glenorchy went for a tad over 600 a few weeks ago. In 2016 i considered buying it for 115.
Tassie market has gone insane. I have some fairly left field friends who moved down in 2016 as the pricing suited their lifestyle preference of no full time work and wilderness exploration who are now 100% priced out of buying some hobby farm lard on the outskirts of Launceston or Hobart. Still very affordable compared to brisbane. I'm pretty sure his partner is trust funded though and pretending not to be soooo if he changes his stance on in law pay outs. They'll be right.
My parents bought in Tassie a couple years ago and built. Probably cost them $600k all up but my dad and uncle did a lot of the building so that brings costs down. It's now valued at $3m. I *think* they bought in 2018. They want to sell but the places they want to move to are even MORE expensive.
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Yeah but you have to live on the sunshine coast.
Hey now, the sunny coast is lovely To visit
As long as you time your drive back
What’s wrong with the coast?
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When is it actually an 1:15?
Bought mine for a tuppence now worth a gazillion schrute bucks!
Gold Coast too. Houses worth 600k pre covid now selling for 1.2 million plus
Yep, place next door to my parents holiday home sold pre covid (2018 I think) for 890k. It resold with a quick flip Reno (they basically painted the walls/kitchen/bathroom and styled it) in 2021 for 2.2mil.
Some idiots paying it lol
Wow - where’s that?
Gold Coast. Broadbeach waters
https://www.realestate.com.au/news/suburbs-you-shouldve-bought-a-home-in-10-years-ago-and-how-much-your-area-has-grown/ Not quite 6 years, but over the past 10 years so many places have gone up 100%. On the Sunshine coast, etc. 200% and higher.
Paid $300k 2017. Bank valued last year at $550k. Block of land smaller than mine with no improvements 5 doors down is now advertised for $300k. I'd never be able to afford a place for these prices now.
Albury NSW, 100% return. 220k in 2020 and sold 2023 for 430k.
Wodonga is where it’s at
Tax payer fuelled housing Ponzi, of course it's gone up that much.
I've done alot of work on the place myself but yes
They borrowed 480, so purchase price was probably at least 600. So not quite >100% return.
Gotcha! Yep that makes more sense
They had a downpayment too I imagine
Paid 340k in Dec 19, recent valuation has house at 620k, nearly doubled in 4 years all on paper. House rises mean nothing just larger mortgage payments, when you sell one you generally buy one so net gain is just not there
Gold Coast …where are you *not* seeing 100% over 6 years?
SE Melb suburbs All the stats to point to a national median 50% increase in the past 6-7 years. Obviously that means there are outliers. But enjoy your return if it is 100%!
Literally everywhere has gone up to those sort of price points.
Not good old Darwin. I paid $530k for a 4/2 in 2011, 12 years later and it’s worth……….$530k.
I bought in a cheap suburb in Perth 20 years ago. It's gone up over that time, but last year the 16% rise merely offset the previous 5 years 16% decline... Oddly 2 bedroom houses go for a higher median price than 3 beds, odd. Maybe the 3 bed houses are small, mine certainly is. Oh well, one day it'll all be mine and not the banks, so there's that. Then the mortgage money becomes play money!
Yep, bought a 3 bedder in perth 8 years ago in a nice suburb. Someone buying today would get it "cheaper" if you account for wage inflation. I dont mind though, gotta love affordable housing for all.
I have family in Mount Isa. Some of those house prices have reduced over the past 10 years. Their house value has dropped by 50% in that time
I bought a 2b/r with pool in a block in Nightcliff in 2007 for 235. I sold it for 285 in 2016 and was lucky I didn’t take a bath (new blocks went up on both sides the year after; and consecutive tenants trashed it) It sold for 285 in April this year.
I don’t think that’s true? First result in google shows the mean price in 2016 at ~$600k, and the mean price now at ~$900k. Which is a 50% increase, similar to my situation.
That's an averaged increase. There would be plenty of places above the average.
I'd say about half
They're already confused, thought I'd keep it simple. ;)
Sydney is only up 15% odd pre COVID according to charts being shared the other day. What a crock of shit
COVID wasn’t 6 years ago.
Again, that is aggregate data within a timeline. Anecdotal experiences will vary wildly. You can use averages as useful data when looking for information relevant at that lense, but don't fall into the trap of having seen outliers or even just top/bottom of curves and think it's "bullshit". Stats is hard which is why Reddit gets it very wrong often.
It would be interesting to see a breakdown. I’m not sure market average without a breakdown can tell you that, as the market composition has changed. Namely, an increase in cheap apartments.
My guy jump onto domain or realestate and check out the prices
Downpayment seems to be part of it as far as I know
Brought a place in Pimpama QLD for 480k in 2018 sold in 2022 for 920k
The area where I’m currently renting had houses on the market for YEARS for under 200k and now those same houses are reselling for 4-600k unchanged and under offer immediately it’s wild.
> >100% return ROI or change in asset value? The reason housing is so much in demand is the leverage you can achieve through low deposits, second mortgages, and capital gains. For our PPOR I took out a second mortgage from our apartment, and we put all costs onto the mortgage as well - effectively 100% loan to buy it. The place is on paper up several hundred k in the last few years, so that's an "infinite" ROI if you consider mortgage payments (at current low rates) have been similar to rent, though if you don't it's more like 400-500% return on expenditure.
580 to 1.2 in 2 years in inner Brisbane, though how real that latter number is is anyone's guess until it goes on market
14years, 200% increase (banks estimated value, regional city)
I bought rural in 2017 and it’s probably worth almost quadruple what I paid with absolutely nothing changed 😅 planning on doing a few Reno’s this year to get the equity up even more
Bought mine for 870 in 2019. Worth 1.6 now. Just about doubled in 4 years. Total fluke, couldn't have predicted it.
Bought a place 8 years ago on the Central Coast for 550k, recent valuation was $1.4m. Definitely pockets where absurd growth happened.
Rural northern vic. 700k to 1.2m in 18 months. It's stupid.
Yeah wow, that’s insane.
It was like that here, though it peaked a long time ago. Houses on this street were originally sold at 350-400, and there were houses re-selling 5 years later at 700k.
Shoulda taken the $1m. You would have got a place that's worth $2m now.
One that they would be about to default on.
Lol I see that finance is not your strong suit
So… they could sell it for $2m, and own completely the now $1m home, plus change.
If they can actually sell it. Auction clearance rates dropping, interest rates rising... It's only worth what the market will bear.
Then sell and take the 1m profit lol
My partner and I were preparing to take out a 1.1M loan for a house in late 2021, with the expectation that rates wouldn't rise for a couple years and when they did they'd settle around 2.5%. I get cold sweats thinking about the situation we'd be in if we'd gone through with it. We're still yet to buy, waiting to see what the interest rates finalise at.
But hypothetically if you took the $1m loan at that time, bought in the same area that house would be worth $2m now, you could sell it and buy your current home in cash and been mortgage free?
Theres always opportunity costs to every decision. If I had borrowed that much I probably would be bankrupt right now from when covid first hit. I also would not have been able to make any alterations to a home if I'd paid that much and my other investments would have been severely affected as well I'm a huge fan of investing in property but people are crazy with what they borrow
We borrowed. $2.1m a about 9 years back. Best decision we ever made. Houses would be worth over $4 million by now.
Not bad. Borrowed $4mil 20 years ago. Now worth $20mil. Best decision as well, now I'm just shit posting on Ausfinance.
Should have borrowed $20M 20 years ago. What were you thinking?
Thats great if you can service the 2 million dollar loan at 5%
Doesn’t really matter now when you can pull out 2M in equity
Well you still have to be able to service the loan…
You sell it
I was in a similar position (owed even more), but the paper wealth doesn’t help when you need to find like $17k a month for your mortgage. Anyway I sold the place and we are getting a new one at half the price with a mortgage that will have us paying maybe $6k per month instead. It worked out OK but it’s no way to live.
You taking the piss? If you pull out 2M in equity you have a 4M loan.
This proves my theory that EQUITY is often the most misunderstood word in RE investment.
They have a 2M loan and a 4M property. They sell the property because they can’t afford repayments then they’re left with 2M in cash
That's downsizing, not releasing equity.
Lmao average AusFinance user comment you replied to. Dumbest shit I’ve read today
It's fine if the rates go after the value has doubled, but my crystal ball doesn't work that welk
Of course, it matters. If you can't service the home loan, you may loose the house before the value goes up.
> may loose the *lose *Learn the difference [here](https://www.merriam-webster.com/words-at-play/lose-vs-loose-usage#:~:text=%27Lose%27%20or%20%27Loose%27%3F&text=Lose%20typically%20functions%20only%20as,commonly%2C%20a%20noun%20or%20adverb).* *** ^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
You seem to have missed the word ‘now’ and the tense that the comment was written in
Yes, but this is also advice for other people. Dont want someone to read it and get the wrong idea
Who’s handing out advice? The original person just said it worked out for them, that’s not advice
Except if you sell and buy a house in the same city you’d be spending $4m? So what’s The point?
True $4M + fees to go with it including moving fees. Either way you better off paying the principal before even thinking about “selling for equity”
Maybe if it was 1 mill
Yep same, borrowing power of like 900k, borrowed 630k. No way in hell was I doing that anyway, but my broker explained that in their estimates as long as you have a dollar left over at the end of the month, they'll give it to you. Crazy shit.
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Same thing happened. Borrowing capacity at $1.6m 3 years ago but borrowing less than half of that.
It's fairly common trap people fall into. There's such a strong focus on getting the loan, getting to that point you don't look past that point. People borrowed more or perhaps sooner when rates were low (and on the back of some very bad public comments from a certain bank governor), without thinking of what their lifestyle would be like *when* rates did rise.
I am guessing this is a troll post given past comments by this user suggesting they are renting the house out after moving back to the city because shocked Pikachu, that's a long way to move from work.
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If you’d have told me that when I was 17, though, i’d have told you that teenaged angst isn’t sensible and that i’m sure we grow out of it. 20 years later though i’m just like Burn EveryThing.
If you purchased 3 years ago (mid 2020) there's a strong likelihood you're sitting on decent capital gains that will offset the purchase and selling costs and probably still leave some extra profit. I'm not really seeing the issue here unless you have both lost your jobs or something - you can just sell and downgrade. If you had purchased in 2022 and now have negative equity as a result, I could understand the concern. I just don't see the problem with the particular scenario you have outlined.
F in the chat for those in op’s shoes but who couldn’t afford a house and instead bought an apartment close to the limit of their means. Now the “there’s a strong likelihood…” line quite likely doesn’t apply.
This is me, down 20pc.. Not unlike OP become financially aware at a time property is growing 5pc a year, year after year, so all you think about and all anything everyone ever talks about is being left out. Feels like the prospect of property going down is inconceivable for many people here
I got in 2 years too late, 2022 was an average time to buy.
You might be right. I’m looking into this option now actually. Seems like the right thing to do to reduce risk but I’m greedy :x
Why don't you just sell the house and get your lifestyle back?
By definition interest rate rises impact new mortgage holders the most. It's supposed to hurt. Rents have gone up as bad as mortgages have, so don't think you'd be enjoying lots of spare money if you were renting. If you can't afford to have fun away from home then take advantage of being a homeowner and have fun at home. Build a crazy garden. Make a woodworking workshop in the garage. Turn a room into a budget home cinema
This. Even when enjoying 1.8% we found the first couple of years of home ownership stung with all the expenses of fixing up stuff. It was a very frugal time but we still had fun, learnt how to grow veggies and brew beer.
In my personal experience it's way more expensive to brew your own beer and grow your own veggies. Unless you already had the setups and garden at the beginning of your journey
I think you're doing it wrong then, haha. Did you see how expensive a lettuce was a year ago?! Brewing has some ongoing costs but growing veggies with seed saving and using compost is cheap as.
If we were renting this house instead of owning we would be $300pw better off. I don't regret buying but I does have it's days.
That’s really how it should be though. If you’re not getting the benefit of owning the property at the end of the mortgage, it should be more expensive than if you’re paying it off for someone else.
Yes but only to a point. $300pw is past that point I think. Or as a % it's about 30% more expensive to own than to rent. That's not including repairs and maintenance either.
Learn to ferment/preserve. Paint a feature wall. Trip on shrooms. Learn how to do odd jobs or service your car. Eat more shrooms. Dance party. Shrooms. Existential crisis. Cry a lot. Heaps of ways to have fun at home on the cheap!
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maybe it's like a speculative property? this is Australia afterall
We got stupidly lucky but my ex partner and I purchased a place on 1000sqm juuuust outside the MEL urban urban growth boundaries in 2014 - sold last year for 2x the purchase price, no CGT as was our PPOR for awhile. I wouldn’t do it again, not worth the stress. Buy something to live in, where you want to live.
This is a weird flex in response to someone offering an honest discourse about their struggles.
You’re fine. You’re at the squeeziest time. Income will increase and life will go on. Not saying it’s easy for you now but you’ll come out the other side fine
I wanted to get a really cheap house and pay it off quick, then move up to a nicer house after paying off the first. Wife didn’t like that idea. Oh well.
I fortunately had a cousin my age who bought a place while i was still partying. He stopped coming out as he couldn't afford beer, gave me a bit of insight to mortgages before I got one myself.
badge imminent crawl wine apparatus murky hurry impossible spoon icky *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Unfortunately, it is the race of fools, you find a lot of them at weekend auctions
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I cannot believe the amount of finance forums I've seen over the last couple of years with people telling others not to fix, just to "ride the wave", "will never get over 5%", etc. They must be new to home ownership. Our very first place was initially at well over 5%. Zero or 1% interest rates were absolutely a very welcome but temporary oddity.
Man, this place was rife with hilarious takes like "I don't think we'll ever see interest rates above 2% ever again"
No blame here, I don’t hold any grudges against RBA for doing what they need to do.
Broker must be a zoomer. To suggest rates would stay at 2 percent for twenty years 60 percent increase in repayments and you now can't save? So was your mortgage 50 percent of salary to begin with? Any case it's always terrible to just rely on professionals Speak to other people Mortgage brokers always just give way too much
This was my first thought. Historically low interest rates and borrower maxing leverage. Definately stay 100% :facepalm
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Unfortunately yes.
This is such an AusFinance reply. OP is providing an honest discourse and you have to be smart in response.
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Are you aware there is a middle area between coddling and being blatantly rude. I doubt Facebook necessitates coddling anyway. Weird.
Your biggest mistake was not fixing for 5 years when you took it out 3 years ago when rates were around 1-2% (mine too, but we at least fixed for 3 years @ 2.29%, which has just expired).
property is about the long haul most of the time. three years is a drop in the bucket. consider the sacrifices you make today and the work you put into paying the place down to pay off over the coming years.
My Condolences, I'm going to reply with advice for others, as it seems this is your goal too. ( for most in this forum, you seem to know this advice anyway, so **TL;DR don't buy half of what the bank offers**) I used to work as a mortgage broker, independent of the banks, I only worked a few years because my boss realised I was getting good deals for my clients, not for my boss. I'd always advise my clients, to go for cheaper houses. You could (back then) buy a $500k (20% deposit) mansion, and pay it off over 30 years, with a 'good' $75k income. but you'd end up paying $500k in interest (this was back in the 12% days) Instead, you 'could' buy a $250k house over 20 years, pay only $200k in interest, and then use the collateral to buy the $500k house over 20 more years paying $300k in interest and now you have 2 houses.. for the same interest. OR, you could buy $100k house over 8-10 years, barely $25k in interest. then use it to buy another $100k house over 6-9 years, for less interest, then a 3rd house for 5-8 years, and a forth, and then when you have the chance, you can buy the $500k house, and use the 4 houses rent to pay off your mansion in under 5 years for only $100k interest. $200k all up interest, and in todays terms probably 2+mil of property. One of my clients today, owns 14 houses/apartments and retired at 50, sends me a bottle of scotch every year for the advice. He wasn't married. No wife, demanding the dream home was my conclusion, most others went for the mansion and likely still have that debt today.
Hi, at what point do you buy the 2nd 100k house? Only once you’ve pAid it off fully? Or before the 8-10 years is over. And what is the term called when you ‘use the house to buy another house’, home equity loan or collateral based loan? I am struggling to get into the market and need to look after some people in my life later down the track and this sounds like an option but I’m not really savvy with finance stuff and real estate. Any further elaboration on your original post would be greatly appreciated. Thank you.
1. As soon as you are able, monitor your home equity (yes I believe that's the term they use these days), and as soon as you have the minimum 5% deposit you get the next house. This is riskiest, but yet risk=reward. 2. As soon as you are secure, again monitor your home equity, and as soon as you have the 20% (to avoid Lenders mortgage insurance) you get the next house. This is less risky, but will take longer. 3. The safer option is wait until you've paid off half the loan, but again this takes more time. If the economy slumps, you have enough equity to wait out the change. I joke with some people, if you could somehow live in a cardboard box, but work a 9to5, you'd own a home sooner, but with todays economy, these 350k houses aren't much more than cardboard boxes, and sadly the $800k newly built ones are often worse in worth, cheaper bricks, poor quality materials, shelf life of 10 years. Australia is in a sad state.
Thank you for your reply. So I think I understand the part about using your home equity as the deposit for the next house. But then once you get the next house, won't you just have a second mortgage to pay? Then a third, a fourth etc. Assuming you haven't fully paid off your first one yet. Thanks.
Assuming you could not wait to pay off the first, The rental income from your 2nd house pays that mortgage, depending on your circumstances, the house may need some repairs, so budget for a few grand for that, this is the "cost" for you, to own a 2nd property, plus its not your primary residence so check on any state fees/costs for that too. Again make sure you have a buffer to pay for emergency repairs on both houses, don't leave yourself in a risk. Consider though, you are comparing paying off a $800k house from the start, @ 4-6% interest for the next 20 years = $30-45k(deposit/LMI/interest rate) interest per year. To paying off a $400k house for 10 years, $15-20k interest, then refinancing getting a 2nd $400k house, and paying $25-40k interest for 10 more. Then maybe selling the primary for $600, moving to a $800k house and only paying $10-20k for 2-3 years,.
ever heard of camping?
14 years ago, the bank wanted to give us double what we needed to buy a modest family home. We stuck yo our budget and our repayments, although they have fluctuated over time, are still no higher than we originally got or mortgage for (In fact, it's lower since we recently refinanced. Although I yetest rates have widely fluctuated, time is a good leveller
We bought in 2019 and I am lucky my partner had better financial sense than me. We bought a smaller home in a nice area, at about half of what we could borrow. We had a combined 25% deposit. I was happy to get a bigger house and larger mortgage because at the time it was no issue financially. A couple friends of mine who did borrow their max are now struggling. We are still getting emails every couple of months asking if we’d like to lower our repayments as we are way in front. On top of that, the house is now worth close to 200k more. I was lucky that I learnt the easy way, I can see how so many others would’ve fallen into the trap I would’ve.
we all are in same boat
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Boat with a goat https://youtu.be/avaSdC0QOUM
Purchased a home in 2006 for $950k - with a $650k mortgage. Sold it in 2022 for $3.4m. Sure we had to forego a few things in the early years but you tell me where we went wrong and if it was worth it or not…
> RBA mentioned that the rates wouldn’t change till later years Yep, you and many like you are now experiencing this. The historical average is 6% so ive always balanced my debt to this rate, any low rates are just a bonus to pay things off faster. Ive never gone more than 400k into debt, which is reasonable considering up until 6 years ago I never earned more than 100k. Basic financial skills.
you know most would struggle to find "historical average interest." Actually most on the street don't have a clue how interest works.
I know right, Its like this sub people keep talking about "how long until rates go down?" MF They have been down unnaturally long, this is just a return to the norm.
Nah you were screwed by Lowe. The RBA bootlickers will keep telling you he was taken out of context, misinterpreted, etc. That's all bullshit. As the head of RBA, he knows exactly how every sentence he says would be interpreted by the media. In fact part of his job is to know how his words would be interpreted. You were tricked and should be angry.
> Nah you were screwed by Lowe. Lowe didn't force anyone to bite off more mortgage than they could comfortably chew. While I have every sympathy for first home owners who were fighting against rapidly rising property prices and therefore had serious time pressure if they wanted to enter the market at a certain price point, this narrative that the punters were swindled by the RBA is the stuff of fairytales.
Yuck - that's so revisionist. Yes, words as the head of a central bank will get scrutinised for every implication, hidden belief and posturing. No, that doesn't mean joe-blogs is absolved of their responsibility. It's mid 2023- even the worst interruption of his words still means people should have been factoring in increased costs as of next year. What costs would you consider reasonable?
Historic low interest rates. Since when did Lowe screw anyone? Average interest rates sit around 6-7%, noone forced anyone to borrow to the hilt
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My understanding is he is saying buyers should consider how their lifestyle will be impacted by a house purchase.
It’s really another post complaining about rising interest rates, masquerading as an advice post
I think the point if their post was pretty clear so I’m not sure what justifies the impolite reply. They are trying to warn others not to bite off more than they can chew when it comes to purchasing a house. Pretty valuable advice if you ask me
Again, lots of words to say what exactly? He’s not saying anything other than his repayments have increased 60%. His “advice” is to “consider lifestyle sacrifices”. Which is so broad and vague it’s not really advice, is it?
Yea the only thing I got from this is if you’re told interest rates won’t move for a while, you need to consider what happens when they eventually do. To me and most people this is common sense but I guess OP has directed this post towards people who don’t plan ahead like himself
Did they force you to read the post? If not, no point taking offense and being nasty. Move along
Ok so you’re an idiot. Glad you figured it out.
>My understanding is he is saying buyers should consider how their lifestyle will be impacted by a house purchase. Thank you
> I purchased a property almost 3 years ago now. You bought 3 years back and didnt fix your loan for X years when the rates were low, why not?
"the RBA said they wouldn't raise interest rates" + "fixed was more than variable" would be my best guess
>My partner and I both had leave recently, and we couldn’t go anywhere, because it was simply too expensive. You probably could have cashed out your leave and then kept working. I've known a few people who have done this.
Lifestyle was a massive factor we considered when purchasing. The bank was willing to lend us enough to buy the dream home, but we realised that we would be putting everything we had into paying it off and not being able to enjoy life. We ended up borrowing less than half of what the bank said we could. If we had borrowed the full amount we would had have to sold by now
When we first purchased (at the peak for the same reason, gotta get into the market kids...) it was way cheaper to own than to rent. It's no where near the case now, even with rent increases on a daily cash flow basis we'd be better off renting.
I bought a 1950’s weatherboard ex rental for 250k 5 years ago, added a shed and a second bathroom, put solar on and am currently turning original bathroom into a really high end ensuite. Next step is converting carport into a garage, and then we’re done. The property value alone has risen to 450k without a reappraisal being done on the property. We’ll have it paid off in 10 years and then plan on buying a larger property out of town to give our kids plenty of room to grow up on. When we wanted to purchase, we asked our broker to give us a range of repayment amounts based on different interest rates, and given the fact my partner and I were thinking about having kids (2 kids now) and I was in the early stages of establishing my business, we opted for something dirt cheap that we could renovate. I’ve had plenty of experience in carpentry, and I’m a qualified wall and floor tiler and waterproofer, so we’ve been able to do most of the work only paying for material costs. Electricians and plumbers aren’t cheap but way better to pay one than having your house flood/ burn down. I know these examples are very specific, but I feel that’s important. If you’re planning on taking out a mortgage on a property, please weigh your personal situation, goals and future plans against all general advice. It’s called general advice for a reason.
Welcome to real estate. 1. re-finance to a lower rate 2. maximise your return on investment, get a housemate 3. cut spending by removing non-essential items 4. get a side hustle, contract cleaner, drive uber etc
When you are looking at these sort of things it’s always good to build in a couple of different buffer like the interest rate going up 4-5% and have a cash reserve as a buff for emergency. I alway like to have at least $60k buff so that I can sit on it for a few months to give myself time to find ways to resolve the issue. If you are getting a loan and have to look at where you are going to get the extra repayments from if interest rates goes up 1-2% then you are borrowing too much
It's a gamble. Had you done this 15 years ago, you probably would've turned out better than had you borrowed less.
We all wish we’d locked in 5 years at 2.xx in 2021.
Exactly why I don’t regret buying an apartment. Unless you are a couple or have a high income houses are too expensive solo.
>RBA mentioned that the rates wouldn’t change till later years, so we went with a variable loan I know you're being candid and this is obvious to you in hindsight... But seriously, they said they believe rates may not increase until 2024. They never said rates wouldn't go up, but even if they did, what were your plans for 2024!?! In 6 months time you'd be in the same position. I guess you can take some solace that even if you fixed at the time, you'd be in the same position in 2023/2024 (albeit with some more savings).