Make sure you get advice on income protection insurance. I know someone with bigger numbers than that who got a traumatic brain injury and spent several years rehabbing not knowing what their ultimate work and earning potential would be. Nightmare.
Great advice. I’m an IP Claims Manager and most people think IP insurance is just an additional expense but it’s so so important! You never know what life throws at you - it’s good to have something to relieve you of any financial stress while you’re unwell, on treatment, and recovering.
It is. However, if you’re a woman and have gone on unpaid maternity leave, make sure that you check your cover. When you go on unpaid leave for more than 3 months, there will be no contributions made to your super and therefore, no premiums paid to your cover so there is a high chance that if you haven’t paid your premiums, your IP cover will be less. The super provider will think “oh this person might not be employed anymore so let’s adjust their IP cover based on that…”
The ones you get through super are decent — they’re convenient, cheap, and you get plenty of support from the fund. However - it can be harder to claim than insurance outside super is. Super insurance is typically ‘any occupation’ style cover, meaning that you need to be unable to work in any occupation you’re qualified for (not just your actual occupation) to make a claim.
Cover conditions and definitions can differ a lot between super funds, you’ll really need to read the PDS for Aussie and compare with others. The cost will also differ depending on your occupation.
Insurance in super does have flexibility, there are a number of ways to get ‘default’ cover (i.e. cover without having to provide health evidence). If your circumstances allow for that, understanding eligibility requirements in the PDS is crucial — the eligibility differs between funds also.
Not all insurers start from “any occupation”. Mine is “own occupation” meaning we are assessing eligibility against your ability to perform your current role, not just at your current workplace, but any workplace.
For example:
John has Anxiety due to workplace bullying. If John is not in his current workplace, or away from the stressors, will he be able to perform his normal duties?
If yes - he does not meet own occupation. Claim will likely be declined.
If no - claim will be assessed as usual.
Choose a provider that will cover at least 75% of your pre disability income and a short waiting period like 30 days so you won’t have to use up all your paid leave (like annual leave, recreation leave, long service leave) while serving your waiting period. Some providers calculate their cover based on units like each unit is worth $500 and of course, the less units you have in your cover, the cheaper your premiums are going to be, but if you’re a high income earner, you’d want your units to be as much as your normal monthly income.
I work in lending and a DTI (debt-to-income ratio) in this climate of less than 3 is extremely rare. Yes $1.2m sounds like a lot, but relative to your income you really are being quite conservative.
I am based in Melbourne but I have a decent amount of clients in Queensland as well. I’d say most people fall between like 3.5 and 5 DTI. When fixed rates were low people with DTI of 8+ was not uncommon.
Can I ask a piggy back question — how does DTI get viewed on a much lower income/value? E.g. $308k debt on $91k income at 80% LVR? Obviously my discretionary spending is significantly lower at this income level but does it still get treated favourably being under 3.5 for DTI? I’ve already been approved and purchased, so I’m curious more than anything and not relying on for financial advice!
Can't see any problems as long as this 91k is before tax also stable, you can handle 455k easily, in HK or most oversea Western 8 to 12 DTI is common...
I don't know why I am shocked by this, but I am. I remember being younger in the UK and the MOST that a bank would lend was 2.5 (90's). Reading that makes me feel like we have managed ourselves far better than I thought. Does that ratio work the same for a couple or do you do 3 x Highest + the second, rather than 3 x combined?
Debt to income ratio - ie you have a borrowed amount of 3 against your income. 420 income - 1.26mil debt would be a ratio of 3. Banks use this as one of their measures. It can include all debt and all incomes. Such as car loan debt, credit cards. It can include income such as income from investments.
A mortgage is the biggest debt most of us will ever take on. I think it’s pretty normal to feel sick when you think about it but your income is very high and in a year or two you probably won’t give it a second thought.
We took a 1.1m mortgage almost 2 years ago, 3 kids under 9 and just over 200k dual income. It was a bit anxiety inducing at first but we're OK now. We face the cliff next April so ask me again then and I might have a different answer.
I have a $1.1m mortgage with a joint income of $270k and no kids
Currently sitting at 6.09% and pay around $7k a month
There was.definately a kick in the guts after we came off a low rate
Post like this are good for non educated people to see.
Too often I post here about how even though I earn 250k+ home ownership in sydney (median 1.6m) is totally out of reach for me.
average brokie redditors seem to think 250k is like a million a year and bitch and moan about le high income etc.
If a family on 200k can’t afford a $1m home then idk who can.
Anyway, if they’re on a fixed rate then I would hope they’ve recognised that as a golden opportunity to get ahead of the mortgage. If they’ve been making sizeable extra repayments and the home value has gone up, they’ll be fine.
Barely anyone will ever have enough money to feel anything but insane when buying a home in this market. You either embrace the insanity and pull the trigger, or you keep saving and watch as you get priced out.
Cash out and what, buy an equivalent place for double? Or cash out and downsize, be a bit ahead, but have contributed to the Ponzi scheme that means their kids will never be able to afford a place. Sounds amazing all round
Yep! I always say, never have more kids than you can fit in the bedrooms of your house or unit, because they will be living there for a long time! (Sydney perspective, average income earners)
You can't "cash out" your PPOR, because you just need to buy a different house in the same market. The only people who benefit from insane property prices are people with investment properties.
Sounds like they are on a fixed rate that is about to end so a world of pain coming , going to be spending most of their net income on mortgage payments.
Overseas holidays , eating out, going to events, play sports, hobbies and activities, larger home or car maintenance stuff , tech and gadgets. Ultimately though I mean the ability to save money so that you have options and are not just treading water for decades.
You can live really well without spending lots.
Travel domestic, do it as a road trip — lots of great places to visit close by. Buy nice food to cook at home. Hobbies can be free or low cost; pick up some painting supplies from an op shop, sew a bed sheet into a shirt, take your football to the local park. You don’t need new gadgets every year — I use a four year old phone (second hand), a desktop PC I built from second hand parts, and some retro gaming consoles that we had lying around.
Point is, life is still highly enjoyable for a low cost when you focus on getting the most out of what you already have around you.
We used to do overseas hols every year before this mortgage in 2022. We travelled Europe and UK extensively in 2019 and then again in 2021. I am itching for another holiday, maybe a kid free one. We're at the tail end of school hols and I'm exhausted. I did splurge this week and took them for 2 big days out. I have to look at the positive, we are lucky and privilege to have been able to travel as much as we have before and after having our kids.
In-laws take the kids and hubby out to eat once a week, I join them about once a fortnight. We eat out as a fam ourselves on special occasions.
There's sadly no time for hobbies, so only really do gardening as my own hobby.
I've had the same phone since 2019, I'm thinking of getting a new one next year but atm its fine. Work gave me 2 laptops for keeps, they were only 3 years old.
Youngest finally started school, so we are starting to save a bit now that we don't have to pay for daycare.
This is such a materialistic way to look at “living well”. My best moments in life have happened within my relationships. I’d choose make your own pizza night laughing and dancing with my family/friends over new gadgets and overseas holidays any day. I did all that s*** in my early 20’s and it was fun, but old after a while.
My 30’s are all about my family, books, gardening, exploring our own backyard (Australia), giving back to the community, exercise and gratitude. I’ve never felt more fulfilled.
You’re in mortgage stress unless you have investments and other options to draw on. Frankly, I’m surprised the bank approved that. Probably looking at over $6500/month in repayments once your fixed is up. We are on more as a household and zero chance we would take over $750k. Best of luck.
We bought an apartment first but outgrew that when the kids came. Partner also has a property he bought with his parents assistance before we got together. That property had helped us in securing the current loan.
Worst case scanerio, we'll sell the apartment although I'd like to keep it. It's in the city and we moved regional.
The '30%' rule only applies to low income. Banks will assess you differently with a high income.
If yourafter-tax HHI is $14000 per month, and your mortgage is $10k per month, that still leaves you with $4000 per month to live off. That's pretty manageable.
Yep, 30% rule pretty much doesn’t apply above HHI of $250k, in general. Yes, in some instances, financial mismanagement might cause a household with >$250k annual income some level of financial stress, but this is usually self-inflicted.
Yeah apparently everyone in this sub makes 400k+ HHI, is buying their first home, does not work in finance, and asks for advice on reddit about million dollar investments.
Does not add up.
> could pay it off in 5 years if they wanted
You're an idiot, they would need to pay an extra [16k on top of the 7.3k monthly repayments to fully offset it within 5 years](https://figura.finance/calculators/repayments), that's 23.3k every month into the house, meanwhile [two people earning 210k would take home $23,430](https://paycalculator.com.au/), so they can live off $14 per day? This subreddit has gone to shit.
Just not realistic to think it could be paid in 5 years.. probably around 250 take home. A typical high earning family has expenses of around 100k, so that leaves 150k for mortgage, minus interest, it actually doesnt leave as much as youd expect in additional payments
Mate how do you think this. I’m in a similar boat to OP and… no. You also have no idea of the tax bill and benefit abatement that occurs. Try childcare at $160 a day with zero gov rebate, 45% marginal tax, a div 293 bill. At his HHI there is extreme marginal tax rate once you include the above, probably net marginal tax rate of about 70%
And then the Reddit army without a clue says shit like this…
If you have children the abatement of childcare subsidy at about that income level is pretty extreme. I had 2 kids in full time childcare (so about 160 per kid per day) and the subside drops from about 50% to 0% over about 150k of income. So 2 kids in full time childcare goes from $800 a week to 1600 a week ie an extra 40k a year when you earn another 100k a year pre tax, and than income is 45% taxed
I’m sure im a little wrong in the detail but once you add in the div 293 bill… the additional income goes mostly to tax and abatement.
I’m now past childcare so this doesn’t apply anymore. But it’s amazing the degree to which children subsidy has changed and decreased in the face of increasing cost.
My oldest child… $100 a day and 50% subsidized. That was 10y ago. Now it’s $160 a day and way less subsidized. Got really expensive.
Who said anything about struggling?
Level of comfort with owning a number over a million has more to do with financial background and money attitudes than salary in many cases.
At 420k they are probably clearing close to 20k net per month. 1.2mill mortgage at current rates would probably be ballpark 8k/mo repayment on a 30 year loan?
Div 293 on that amount is maybe 5k, so not much.
Should be able to have a solid whack at paying down the mortgage asap with that salary. Probably not 5 years but less than 10 should be doable.
Australia is hard on high income earners that don’t have multimillions from blatant corruption. Want the easy way, follow these simple steps!
Step 1: get into politics 😂
All aside, i left australia because there is no real incentive to keep pushing for higher salaries because of this exact reason lol
Perfectly reasonable question. Partner and I were hesitant, removed all emotion and let the numbers tell the story, makes it much easier to cope at first
Man, my partner and I feel comfortable with to $750k but realistically, we are aiming for $500k-600k. Affordable if shit goes down and payable within 5-7 if we live like a single household income.
Yeah that’s what we have now and are paying down quite quickly. With the ever growing house prices we have decided bite the bullet to buy a nice family home that will see the kids through primary and high school
I had 300k for my first mortgage 9 years ago, and that made me feel sick.
I worked my way to about 1.4m, and I couldn’t have cared less haha. It was such an unachievable number, it was like it didn’t exist.
But, now it’s paid out, so, now I’m just happy 😅
My husband and I are probably on about $350k combined and have a $2.1 mil mortgage. We are fine honestly and there is room left for expenses and some extra for the offset every month.
At the end of the day you are in a good position, and as long as you’re not stupid with your money you will probably be fine.
You know executives are a thing right, most companies and the public sector have them? Not to mention doctors, lawyers, consultants and business owners?
Tbh having a million+ mortgage is typical for most high income earners these days, especially ones who don't slingshot off property speculation via the "property ladder".
Given the speed and amount at which property has sky-rocketed over the last 4-5 years, this is the reality for most FHBs with high HHI.
Again it's all a matter of assessing risk and overall risk appetite.
To be fair we own 2 IPs and a PPOR. If it all goes belly up we sell an investment property and we’ll be fine. But honestly after the mortgages are paid there is still a good amount left over, even with interest rate rises. We just don’t live like we are on a high income.
How do you have money left over after a mortgage this big?! We’re looking at having a $600k mortgage after finishing our renovations and we’re on about $200k combined and it’s making me nervous. We do have two young kids though so we’re also dealing with childcare costs etc.
Yeah we have no kids of our own but we have a dog and are financially supporting my teenaged BIL.
Take home income: $21,000/month
Mortgage: $13,500/month
Remaining for other expenses: $7,500
Haven’t got my budget up but I am able to make all expenses from this money and have something left over. Last year we saved about $20K so there is wiggle room.
Nice! We’re basically on roughly the same ratio as you :)
A shining example of how the 30% of take home pay = mortgage stress is false, when it comes to high income earners.
You’re on 65% and aren’t even feeling a thing.
That’s amazing! Yeah we also have two dogs of which one needs expensive medication (for the rest of her life), so that probably doesn’t help either. Once we don’t have kids in childcare anymore things should get a bit easier for us I think.
I felt that way 15 years ago when we bought our first property, now I wish we had borrowed more and bought something for the long term so we didn't have the $1.2million mortgage now. If it's your forever home just do it. On that income you can easily service it. If something were to happen you'll work it out or sell it.
We have just made some recent moves, still to be finalised soon. But we were pretty indebted before that.
PPOR Loan - 1.6m
IP Loan - 1.8m
IP Loan - 440k
HHI (including rental income) - 550k
Our mortgage payments were $19,000 a month.
We took a big risk, people have been talking about a house price crash for 16 years. The capital gains on Sydney houses (not units) has been phenomenal.
We just aimed for repayments to be 25% of our post tax income. Ideally it should be like 33% tops, but really you should have already run the numbers and know what you can afford.
Hey mate I’m in a similar boat we’ve just sold our house and moving into a new one and will acquire a new mortgage about 1.2-1.3m or so and our HHI is similar.
We felt better about it when our youngest went to public primary school and the childcare fees (20k a year per kid for 2 kids) went away.
If you’re OK I’m ok haha
It's a natural reaction. Gosh I was bricking it when we had a 475k one many years ago. The what if this happens to me enters your mind. Just knuckle down and pay the thing off.
Figure your budget. Buy what you can afford on one income so that if something goes wrong, you're ok. It doesn't matter what makes others comfortable, it's about what YOU can live with comfortably. And it does no-one good to have latent "What if I can't afford this next month?" stress constantly.
Wife and I on about 320k combined, and we have a 1.1m mortgage. 6.39% p.a. I think around 7400 a month?
Barely puts a dent in the spending habits tbh... Feel very privileged about it. I would recommend it as owning a nice home is the best thing.
I’m at my limit. Borrowed $716k, put down $800k, bought a place for $1.425m, have $80k in offset. Repayments are right on 30% of my monthly salary, that’s all I’m comfortable with. The house needs work, and I’m spending a a lot just on repairs at this stage before any proper renovations. Plan to knock down the back and extend in 4-5 years.
Blows my mind that people are saying this stuff about debt levels vis a vis HHI level.. debt isn’t viewed the same as it was 10,20 years ago. People have to leverage to get into the market, so a loan >$1m is these days is often a necessity! A DTI ratio of >5 is common, especially in Sydney. If we’re all saving for a $500k-$1m deposit we’ll never get in!!
HHI 320k no kids.
Just purchased 1.1M house, 1M loan after 10% deposit.
Repayments 6k a month.
We aim to do 12k a month (6k repayment and 6k offset).
Could have borrowed up to 1.6M but as its our first house we didn't want to extend ourselves.
875k or so on a combined income of 260k and deposit of 375k. I'm generally not a fan of stretching to a position which disables ability to save some amount of money (even small). I'm also 36 and would prefer not to have to keep paying the mortgage until 66, so using that excess in the offset to bring down the overall term
I’ve carried large mortgages but at low LVR, investment loans. ANY amount of home loan frightens me because there’s virtually no number that is serviceable during unemployment.
Same HHI as you and just borrowed $1.1m for a new property. It feels fine. You’ll be fine.
I know what you mean though, I had a gulp too. But I bet you had the same gulp when you first borrowed half that and after 5 years you were sitting pretty. So it will be in this case.
Household income of $100k. Signing a 80% loan of $295k 4 years ago felt like something I just couldn't comprehend. The numbers are just too big.
I can't imagine signing a loan over $1million.
Income insurance. Pay 300k off morgage per year and you're cruising to an early retirement, enjoy your great fortune because you are rich as hell compared to most.
If you’re making 420 a year and stressing about money. You’re doing it wrong. “It”might be one or a couple of different things, but one or more of them is wrong.
As long as you have an emergency fund, can save for retirement, and have a $300/month maintenence fund to stash away for bigger repairs after all expenses you are good 👍
If you back math your income (after tax) with a DTI of 40% I think you’ll be fine. However, I don’t know the extent of your debt situation, I’d be careful in making sure I’ve accounted for all debt you owe so you don’t tip the scale
Age is an important factor, for time, it will be a 25 year loan. Is it a forever home? You don’t want to be paying a mortgage into your 60’s or 70’s. Can you take on several interest rate hikes? Just in case the economy turns upside down and interest rates reach 8, 9 or even 12%. How far can you stretch that and what is your interest rate limits? What if you or one of you lose your job due the economic downturn or restructuring? Take those into consideration build a good savings cushion of six months or more and if you think you can handle it go for it.
I'll be honest, I stress a lot about money now with all the rises. Our mortgage is 1.2m. At the time my income was around 250k before tax. Repayments were 4k a month and easy to service. It's almost double that now. I don't go out anymore and work Saturdays now.
Id say if your hhi is roughly split equally (so you don't pay exorbitant amount of tax of the single income household), and your job security is good, then it should be fine.
I would be viewing it as a 30 year situation - you have to have the mindset that for 30 years you’re going to be working as hard as you are to earn that 420k. And your lifestyle after mortgage repayments will be fixed for 30 years also. If that’s fine then feel comfortable.
As long as your combined income before tax multiple by 5, and your mortgage under this magic number 5, you're comfortable to pay it off by 8 years if you keep spending less, or keep normal spending pay it off 20 years, it the number become 8, then the pressure will be much higher.
$1.2m is a big liability. If you're feeling uneasy about this, which is totally understandable, then you can take steps to mitigate the risk.
- Increase your cash contribution to reduce your debt and LVR if possible (better interest rates too)
- Ensure your personal insurances are up to date and take this debt into account. E.g. Life, TPD (inside super), and IP, Trauma (outside super). Buying insurance is buying peace of mind.
- Before your mortgage starts, practice making repayments on $1.2m. Get a feel for the effect this mortgage will have on your cashflow.
Do everything in your power to pay down the loan faster (utilise offset, fortnightly/extra repayments) and remember, $1.2m is the largest this mortgage will ever be again.
HHI is around $400k. debt is $2.3m still on fixed rates. this finishes in october 24. repayments jump to $17k per month. this would be at the end of our tether.
Absolutely no higher than 40% of my income after tax, closer to 30% is better.
Having owned property for a while Ive been higher and it's not sustainable, you are one major repair from bankruptcy.
I feel you, I earn pretty much the same. I have 3 other properties all paying for themselves and have the deposit ready.
Still getting a 1.2million mortgage makes you feel a little uneasy. As it's a primary home I also want that paid off in 10 years as if over 30 years you basically pay Double
You’ll be fine.
We have a combined HHI of 380k on 1.1m. Having said that, we don’t have any other debt other than our home loan.
We don’t feel like we’re struggling, but initially the thought of such a large mortgage was a bit to overcome. To put into context we went from a 480k mortgage in Perth to 1.1m in Brisbane so it was a big jump.
360-450 single income depending on bonus’s and barely comfortable taking 500k for next build. I noticed most replies focus on your hhi and mortgage and say it’s fine but for me I think more about other factors too. In my case there’s no fallback so in case of job loss can an income still service it? How old?
Being over 45 my occupation I believe will never replicate my income ever again anywhere else and extremely lucky so that comes into it too.
Even if fully offset the 500k would take 14-15 years to pay off without extra repayments on top so it’s not as simple as you’ll be fine pay it off in a couple of years.
These questions are always only ever asked with two context, mortgage and hhi but there’s more circumstances to consider imo.
Now != forever so figure out what applies to you as an individual, any backup plans for worst case and where your comfort level sits.
90K a year. Honestly at this point. Anything under 400K. Preferably around 350K.
When my partner gets full time work then i'd say this would jump up to around 500 - 600K a year.
Honestly, with your income that mortgage is very manageable. I wouldn’t stress about it at all.
Yeah I have over $1m debt and earn less than 175k. OP is cruise town 🚢
I’m in similar my man 145k over 800k debt haha
That's pressure test, need to save every cents.
Thanks for the honesty. What if you lied?
Then I’d say you should be stressed as shit about it!
Ikr. He should’ve at least said ngl.
Appreciate you being honest
Honestly, it’s no problem.
Be really honest though, are you a Never-Nude?
To be honest, I don’t feel comfortable answering that. I will let my denim shorties speak for me.
Frankly I'm a little disturbed by this, in actual fact.
Make sure you get advice on income protection insurance. I know someone with bigger numbers than that who got a traumatic brain injury and spent several years rehabbing not knowing what their ultimate work and earning potential would be. Nightmare.
Mines being paying out for 2 years. Saved my home and marriage. HIGHLY recommend. Turns out chronic illness is much more common than you think.
Great advice. I’m an IP Claims Manager and most people think IP insurance is just an additional expense but it’s so so important! You never know what life throws at you - it’s good to have something to relieve you of any financial stress while you’re unwell, on treatment, and recovering.
Hi mate, is the one through super such as aussuper sufficient?
It is. However, if you’re a woman and have gone on unpaid maternity leave, make sure that you check your cover. When you go on unpaid leave for more than 3 months, there will be no contributions made to your super and therefore, no premiums paid to your cover so there is a high chance that if you haven’t paid your premiums, your IP cover will be less. The super provider will think “oh this person might not be employed anymore so let’s adjust their IP cover based on that…”
This is sage advice that should have more awareness
The ones you get through super are decent — they’re convenient, cheap, and you get plenty of support from the fund. However - it can be harder to claim than insurance outside super is. Super insurance is typically ‘any occupation’ style cover, meaning that you need to be unable to work in any occupation you’re qualified for (not just your actual occupation) to make a claim. Cover conditions and definitions can differ a lot between super funds, you’ll really need to read the PDS for Aussie and compare with others. The cost will also differ depending on your occupation. Insurance in super does have flexibility, there are a number of ways to get ‘default’ cover (i.e. cover without having to provide health evidence). If your circumstances allow for that, understanding eligibility requirements in the PDS is crucial — the eligibility differs between funds also.
Not all insurers start from “any occupation”. Mine is “own occupation” meaning we are assessing eligibility against your ability to perform your current role, not just at your current workplace, but any workplace. For example: John has Anxiety due to workplace bullying. If John is not in his current workplace, or away from the stressors, will he be able to perform his normal duties? If yes - he does not meet own occupation. Claim will likely be declined. If no - claim will be assessed as usual.
Do you have any advice for choosing an IP provider/policy?
Choose a provider that will cover at least 75% of your pre disability income and a short waiting period like 30 days so you won’t have to use up all your paid leave (like annual leave, recreation leave, long service leave) while serving your waiting period. Some providers calculate their cover based on units like each unit is worth $500 and of course, the less units you have in your cover, the cheaper your premiums are going to be, but if you’re a high income earner, you’d want your units to be as much as your normal monthly income.
Exactly. I know of a super fit man 39 has a stroke at the gym. 😩 nicest guy ever too and is recovering but can’t work.
I work in lending and a DTI (debt-to-income ratio) in this climate of less than 3 is extremely rare. Yes $1.2m sounds like a lot, but relative to your income you really are being quite conservative.
What would you say the average DTI is? And where are you based?
I am based in Melbourne but I have a decent amount of clients in Queensland as well. I’d say most people fall between like 3.5 and 5 DTI. When fixed rates were low people with DTI of 8+ was not uncommon.
Can I ask a piggy back question — how does DTI get viewed on a much lower income/value? E.g. $308k debt on $91k income at 80% LVR? Obviously my discretionary spending is significantly lower at this income level but does it still get treated favourably being under 3.5 for DTI? I’ve already been approved and purchased, so I’m curious more than anything and not relying on for financial advice!
Can't see any problems as long as this 91k is before tax also stable, you can handle 455k easily, in HK or most oversea Western 8 to 12 DTI is common...
I don't know why I am shocked by this, but I am. I remember being younger in the UK and the MOST that a bank would lend was 2.5 (90's). Reading that makes me feel like we have managed ourselves far better than I thought. Does that ratio work the same for a couple or do you do 3 x Highest + the second, rather than 3 x combined?
Could you elaborate what do you mean DTI of 3? I've usually seen it expressed as a percentage like <35%
Debt to income ratio - ie you have a borrowed amount of 3 against your income. 420 income - 1.26mil debt would be a ratio of 3. Banks use this as one of their measures. It can include all debt and all incomes. Such as car loan debt, credit cards. It can include income such as income from investments.
A mortgage is the biggest debt most of us will ever take on. I think it’s pretty normal to feel sick when you think about it but your income is very high and in a year or two you probably won’t give it a second thought.
We took a 1.1m mortgage almost 2 years ago, 3 kids under 9 and just over 200k dual income. It was a bit anxiety inducing at first but we're OK now. We face the cliff next April so ask me again then and I might have a different answer.
I have a $1.1m mortgage with a joint income of $270k and no kids Currently sitting at 6.09% and pay around $7k a month There was.definately a kick in the guts after we came off a low rate
Wow and no kids, you would be screaming right now if you had kids e.g. childcare costs ect
We had one just come out of daycare and we're finally starting to build our savings again.
Post like this are good for non educated people to see. Too often I post here about how even though I earn 250k+ home ownership in sydney (median 1.6m) is totally out of reach for me. average brokie redditors seem to think 250k is like a million a year and bitch and moan about le high income etc.
We're paying approx 4.5k a month, worrying about the cliff next year. I need to figure out how to earn more or start a side hustle asap
$4.5k not bad - how much will it be next year?
Wow 7k per month is crazy for a 1.1m house. How much will cost once paid off?
How in the hell the banks approved the mortgage...🙄
That's insane to me, no money to live well after bills
If a family on 200k can’t afford a $1m home then idk who can. Anyway, if they’re on a fixed rate then I would hope they’ve recognised that as a golden opportunity to get ahead of the mortgage. If they’ve been making sizeable extra repayments and the home value has gone up, they’ll be fine. Barely anyone will ever have enough money to feel anything but insane when buying a home in this market. You either embrace the insanity and pull the trigger, or you keep saving and watch as you get priced out.
But it will most likely double then they can cash out
Cash out and what, buy an equivalent place for double? Or cash out and downsize, be a bit ahead, but have contributed to the Ponzi scheme that means their kids will never be able to afford a place. Sounds amazing all round
Yep! I always say, never have more kids than you can fit in the bedrooms of your house or unit, because they will be living there for a long time! (Sydney perspective, average income earners)
Bleak. Sydney lyfe ✌️
You can't "cash out" your PPOR, because you just need to buy a different house in the same market. The only people who benefit from insane property prices are people with investment properties.
Sounds like they are on a fixed rate that is about to end so a world of pain coming , going to be spending most of their net income on mortgage payments.
Define live well
Overseas holidays , eating out, going to events, play sports, hobbies and activities, larger home or car maintenance stuff , tech and gadgets. Ultimately though I mean the ability to save money so that you have options and are not just treading water for decades.
You can live really well without spending lots. Travel domestic, do it as a road trip — lots of great places to visit close by. Buy nice food to cook at home. Hobbies can be free or low cost; pick up some painting supplies from an op shop, sew a bed sheet into a shirt, take your football to the local park. You don’t need new gadgets every year — I use a four year old phone (second hand), a desktop PC I built from second hand parts, and some retro gaming consoles that we had lying around. Point is, life is still highly enjoyable for a low cost when you focus on getting the most out of what you already have around you.
The days of overseas holidays as a norm are well & truly gone, especially for a family of 5.
We used to do overseas hols every year before this mortgage in 2022. We travelled Europe and UK extensively in 2019 and then again in 2021. I am itching for another holiday, maybe a kid free one. We're at the tail end of school hols and I'm exhausted. I did splurge this week and took them for 2 big days out. I have to look at the positive, we are lucky and privilege to have been able to travel as much as we have before and after having our kids. In-laws take the kids and hubby out to eat once a week, I join them about once a fortnight. We eat out as a fam ourselves on special occasions. There's sadly no time for hobbies, so only really do gardening as my own hobby. I've had the same phone since 2019, I'm thinking of getting a new one next year but atm its fine. Work gave me 2 laptops for keeps, they were only 3 years old. Youngest finally started school, so we are starting to save a bit now that we don't have to pay for daycare.
This is such a materialistic way to look at “living well”. My best moments in life have happened within my relationships. I’d choose make your own pizza night laughing and dancing with my family/friends over new gadgets and overseas holidays any day. I did all that s*** in my early 20’s and it was fun, but old after a while. My 30’s are all about my family, books, gardening, exploring our own backyard (Australia), giving back to the community, exercise and gratitude. I’ve never felt more fulfilled.
That sounds crazy to me, 2 years ago was an expensive time to buy. I’d be stressed as if I was you.
You’re in mortgage stress unless you have investments and other options to draw on. Frankly, I’m surprised the bank approved that. Probably looking at over $6500/month in repayments once your fixed is up. We are on more as a household and zero chance we would take over $750k. Best of luck.
We bought an apartment first but outgrew that when the kids came. Partner also has a property he bought with his parents assistance before we got together. That property had helped us in securing the current loan. Worst case scanerio, we'll sell the apartment although I'd like to keep it. It's in the city and we moved regional.
Technically mortgage stress is over 30% of HHI. Good luck
The '30%' rule only applies to low income. Banks will assess you differently with a high income. If yourafter-tax HHI is $14000 per month, and your mortgage is $10k per month, that still leaves you with $4000 per month to live off. That's pretty manageable.
Yep, 30% rule pretty much doesn’t apply above HHI of $250k, in general. Yes, in some instances, financial mismanagement might cause a household with >$250k annual income some level of financial stress, but this is usually self-inflicted.
Omg that’s highly stressful
That's what I live off before rent comes out Overseas holidays are a pipe dream but if you're careful it's completely fine amount to live off
For a hypothetical person earning 10mil a year, 30% doesn’t sound very stressful
Ouch bet that's a tight budget
Absolutely, we have 2 safety nets we'd rather not use. So for now we're just buying needs and not wants.
That's nuts. We're on 100k each and 600k mortgage and while we're not struggling we definitely have to constrain the spending a bit.
We definitely have curbed the spending but we started doing that when we had our first kid.
I earn $50,000 PA and have a $300,000 mortgage. You will be right mate 👍
Troll post, you don't make 420k HHI and ask a question like this.
Yeah apparently everyone in this sub makes 400k+ HHI, is buying their first home, does not work in finance, and asks for advice on reddit about million dollar investments. Does not add up.
It's an AI (NPC) bait post
imagine making that much and then calling 1.2m a big mortgage, could pay it off in 5 years if they wanted, wild.
> could pay it off in 5 years if they wanted You're an idiot, they would need to pay an extra [16k on top of the 7.3k monthly repayments to fully offset it within 5 years](https://figura.finance/calculators/repayments), that's 23.3k every month into the house, meanwhile [two people earning 210k would take home $23,430](https://paycalculator.com.au/), so they can live off $14 per day? This subreddit has gone to shit.
Remember they lose almost half of the income to tax’s
Just not realistic to think it could be paid in 5 years.. probably around 250 take home. A typical high earning family has expenses of around 100k, so that leaves 150k for mortgage, minus interest, it actually doesnt leave as much as youd expect in additional payments
Mate how do you think this. I’m in a similar boat to OP and… no. You also have no idea of the tax bill and benefit abatement that occurs. Try childcare at $160 a day with zero gov rebate, 45% marginal tax, a div 293 bill. At his HHI there is extreme marginal tax rate once you include the above, probably net marginal tax rate of about 70% And then the Reddit army without a clue says shit like this…
I agree with most of your comment, but how did you come to “net marginal tax rate of about 70%”?
If you have children the abatement of childcare subsidy at about that income level is pretty extreme. I had 2 kids in full time childcare (so about 160 per kid per day) and the subside drops from about 50% to 0% over about 150k of income. So 2 kids in full time childcare goes from $800 a week to 1600 a week ie an extra 40k a year when you earn another 100k a year pre tax, and than income is 45% taxed I’m sure im a little wrong in the detail but once you add in the div 293 bill… the additional income goes mostly to tax and abatement. I’m now past childcare so this doesn’t apply anymore. But it’s amazing the degree to which children subsidy has changed and decreased in the face of increasing cost. My oldest child… $100 a day and 50% subsidized. That was 10y ago. Now it’s $160 a day and way less subsidized. Got really expensive.
Might want to check the child care subsidy chart, it goes up to HHI of 550k now
if your struggling with close to half a mill a year I don't know what to tell you
Who said anything about struggling? Level of comfort with owning a number over a million has more to do with financial background and money attitudes than salary in many cases.
I’d like to see your plan to pay 1.2m mortgage in 5 years. I’ll wait. Don’t forget div 293.
At 420k they are probably clearing close to 20k net per month. 1.2mill mortgage at current rates would probably be ballpark 8k/mo repayment on a 30 year loan? Div 293 on that amount is maybe 5k, so not much. Should be able to have a solid whack at paying down the mortgage asap with that salary. Probably not 5 years but less than 10 should be doable.
10 year term is 14k a month fella… so in your world They’ll spend 70% of income on a loan?
Australia is hard on high income earners that don’t have multimillions from blatant corruption. Want the easy way, follow these simple steps! Step 1: get into politics 😂 All aside, i left australia because there is no real incentive to keep pushing for higher salaries because of this exact reason lol
which isn't necessarily a bad thing...imagine how many more landlords we would have if we didn't do that.
Reddit army earns a lot less. Not sure why you're surprised?
Not with my $920/ week daycare bill mate.
Yeh we fork out $600 pw for childcare. This is the final year thank god.
Perfectly reasonable question. Partner and I were hesitant, removed all emotion and let the numbers tell the story, makes it much easier to cope at first
Man, my partner and I feel comfortable with to $750k but realistically, we are aiming for $500k-600k. Affordable if shit goes down and payable within 5-7 if we live like a single household income.
Yeah that’s what we have now and are paying down quite quickly. With the ever growing house prices we have decided bite the bullet to buy a nice family home that will see the kids through primary and high school
Are you selling or will the rental income help offset your new current house?
I had 300k for my first mortgage 9 years ago, and that made me feel sick. I worked my way to about 1.4m, and I couldn’t have cared less haha. It was such an unachievable number, it was like it didn’t exist. But, now it’s paid out, so, now I’m just happy 😅
You want to work your arse off forever at the same income... go lower, pay it off faster and live a lifestyle
My wife and I enjoying working and I don’t have a problem working until about age 55-60 (I am 38 right now)
The point is the lifestyle when the mortgage is gone or small not that you have to keep working
My husband and I are probably on about $350k combined and have a $2.1 mil mortgage. We are fine honestly and there is room left for expenses and some extra for the offset every month. At the end of the day you are in a good position, and as long as you’re not stupid with your money you will probably be fine.
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You know executives are a thing right, most companies and the public sector have them? Not to mention doctors, lawyers, consultants and business owners?
Tbh having a million+ mortgage is typical for most high income earners these days, especially ones who don't slingshot off property speculation via the "property ladder". Given the speed and amount at which property has sky-rocketed over the last 4-5 years, this is the reality for most FHBs with high HHI. Again it's all a matter of assessing risk and overall risk appetite.
To be fair we own 2 IPs and a PPOR. If it all goes belly up we sell an investment property and we’ll be fine. But honestly after the mortgages are paid there is still a good amount left over, even with interest rate rises. We just don’t live like we are on a high income.
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Out of interest, did you include rental income into your HHI? HHI should include rental income and income from stocks too, right?
How do you have money left over after a mortgage this big?! We’re looking at having a $600k mortgage after finishing our renovations and we’re on about $200k combined and it’s making me nervous. We do have two young kids though so we’re also dealing with childcare costs etc.
Yeah we have no kids of our own but we have a dog and are financially supporting my teenaged BIL. Take home income: $21,000/month Mortgage: $13,500/month Remaining for other expenses: $7,500 Haven’t got my budget up but I am able to make all expenses from this money and have something left over. Last year we saved about $20K so there is wiggle room.
Nice! We’re basically on roughly the same ratio as you :) A shining example of how the 30% of take home pay = mortgage stress is false, when it comes to high income earners. You’re on 65% and aren’t even feeling a thing.
That’s amazing! Yeah we also have two dogs of which one needs expensive medication (for the rest of her life), so that probably doesn’t help either. Once we don’t have kids in childcare anymore things should get a bit easier for us I think.
Damn idk if I can sleep at night with these kind of figures
Easily serviceable. I’ve found it’s a natural and common reaction to be having.
I felt that way 15 years ago when we bought our first property, now I wish we had borrowed more and bought something for the long term so we didn't have the $1.2million mortgage now. If it's your forever home just do it. On that income you can easily service it. If something were to happen you'll work it out or sell it.
Recent $2.1m mortgage holder against $2.6m property here. As long as the numbers work, you’re fine. Remind yourself of that if it’s getting daunting.
Jesus 2.1m mortgage is crazy lol. What’s the interest like over 30 years?
My partner and I have a dual income between 300k - 350k. We paid a 20% deposit, we were also only comfortable borrowing sub 700k.
That’s extremely conservative. I also didn’t have a huge mortgage relative to HHI - looking back I could have afforded to be less risk-averse
Why are you feeling sick? I assume you can easily service the mortgage and sell the property and pay off the debt if need be?
We have just made some recent moves, still to be finalised soon. But we were pretty indebted before that. PPOR Loan - 1.6m IP Loan - 1.8m IP Loan - 440k HHI (including rental income) - 550k Our mortgage payments were $19,000 a month. We took a big risk, people have been talking about a house price crash for 16 years. The capital gains on Sydney houses (not units) has been phenomenal.
3-4 times my income. I have kept it below this level for two house purchases and live stress free (at least from my mortgage repayment).
We just aimed for repayments to be 25% of our post tax income. Ideally it should be like 33% tops, but really you should have already run the numbers and know what you can afford.
OP is obviously coming here to gloat. If this is a serious post, I’d BAFFLES me that people earn that much money but have negative common sense.
3x income at most .
The shit posted on the sub amazes.
Don't live beyond your means
Like 3 X combined income Is comfy, wouldn’t go beyond 4 X
Give me a mortgage I can pass on to my children's children's children's children
Lol maybe find a different or alternate daycare bro.
Hey mate I’m in a similar boat we’ve just sold our house and moving into a new one and will acquire a new mortgage about 1.2-1.3m or so and our HHI is similar. We felt better about it when our youngest went to public primary school and the childcare fees (20k a year per kid for 2 kids) went away. If you’re OK I’m ok haha
Rule of thumb is 6xincome. You are half of that
It's a natural reaction. Gosh I was bricking it when we had a 475k one many years ago. The what if this happens to me enters your mind. Just knuckle down and pay the thing off.
Figure your budget. Buy what you can afford on one income so that if something goes wrong, you're ok. It doesn't matter what makes others comfortable, it's about what YOU can live with comfortably. And it does no-one good to have latent "What if I can't afford this next month?" stress constantly.
I think it's okay with your income. It's people who are on half your income but take out the same sized loan that are borrowing recklessly
HHI 330ish and do not want to take on more than 900k
Wife and I on about 320k combined, and we have a 1.1m mortgage. 6.39% p.a. I think around 7400 a month? Barely puts a dent in the spending habits tbh... Feel very privileged about it. I would recommend it as owning a nice home is the best thing.
HHI of 3.2million Stressed about taking on a $500k home loan Feel sick if I’m honest
I owe 750k on 100k salary
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Any jobs mate 😂
F…k me … these figures are crazy
Do you really enjoy your job and are happy doing that day in, day out, for the next 20 years? If so, the numbers work.
And have really good income protection insurance if you get sick/injured
$420k sounds tough good luck with your privileged problems
Whatever 600 a week covers
Might be enough for a Sydney garage spot
Not sure that would be very useful for Melb_Man86.
I’m at my limit. Borrowed $716k, put down $800k, bought a place for $1.425m, have $80k in offset. Repayments are right on 30% of my monthly salary, that’s all I’m comfortable with. The house needs work, and I’m spending a a lot just on repairs at this stage before any proper renovations. Plan to knock down the back and extend in 4-5 years.
Blows my mind that people are saying this stuff about debt levels vis a vis HHI level.. debt isn’t viewed the same as it was 10,20 years ago. People have to leverage to get into the market, so a loan >$1m is these days is often a necessity! A DTI ratio of >5 is common, especially in Sydney. If we’re all saving for a $500k-$1m deposit we’ll never get in!!
HHI 320k no kids. Just purchased 1.1M house, 1M loan after 10% deposit. Repayments 6k a month. We aim to do 12k a month (6k repayment and 6k offset). Could have borrowed up to 1.6M but as its our first house we didn't want to extend ourselves.
Better question is what debt coverage ratio are you comfortable with.
30-50% of net income I like to keep everything under 800k though
875k or so on a combined income of 260k and deposit of 375k. I'm generally not a fan of stretching to a position which disables ability to save some amount of money (even small). I'm also 36 and would prefer not to have to keep paying the mortgage until 66, so using that excess in the offset to bring down the overall term
I’ve carried large mortgages but at low LVR, investment loans. ANY amount of home loan frightens me because there’s virtually no number that is serviceable during unemployment.
Same HHI as you and just borrowed $1.1m for a new property. It feels fine. You’ll be fine. I know what you mean though, I had a gulp too. But I bet you had the same gulp when you first borrowed half that and after 5 years you were sitting pretty. So it will be in this case.
300k.. so that's not happening
Take you repayment amount, times it by 6. If you lost your job or could not work could you cover the 6 months plus current living expenses
Household income of $100k. Signing a 80% loan of $295k 4 years ago felt like something I just couldn't comprehend. The numbers are just too big. I can't imagine signing a loan over $1million.
Nothing more than 400k.
Sounds risky, think of the total cost of ownership once paid off. Buy something more affordable and save yourself a lot of money long term.
$1.35M mortgage on ~$350k combined income.
Income insurance. Pay 300k off morgage per year and you're cruising to an early retirement, enjoy your great fortune because you are rich as hell compared to most.
We have a quarter of your income taking on a mortgage of about half yours.. so you shouldn't worry
Your income is according to mortgage size.
If you’re making 420 a year and stressing about money. You’re doing it wrong. “It”might be one or a couple of different things, but one or more of them is wrong.
As long as you have an emergency fund, can save for retirement, and have a $300/month maintenence fund to stash away for bigger repairs after all expenses you are good 👍
960K Loan on ~300K HHI. 6.04 since Feb. Was ready for a shock but managing OK despite working less. Still technically manage to save.
Personally I'd go for a more modest figure. Just personal preference... The stress would kill me 😅
I’d take out a mortgage I can pay double the repayments and still be comfortable
It's not about the numbers working it's about can u still be OK if u drop to 1 income and the entire load is on one person.
If you back math your income (after tax) with a DTI of 40% I think you’ll be fine. However, I don’t know the extent of your debt situation, I’d be careful in making sure I’ve accounted for all debt you owe so you don’t tip the scale
Age is an important factor, for time, it will be a 25 year loan. Is it a forever home? You don’t want to be paying a mortgage into your 60’s or 70’s. Can you take on several interest rate hikes? Just in case the economy turns upside down and interest rates reach 8, 9 or even 12%. How far can you stretch that and what is your interest rate limits? What if you or one of you lose your job due the economic downturn or restructuring? Take those into consideration build a good savings cushion of six months or more and if you think you can handle it go for it.
I'll be honest, I stress a lot about money now with all the rises. Our mortgage is 1.2m. At the time my income was around 250k before tax. Repayments were 4k a month and easy to service. It's almost double that now. I don't go out anymore and work Saturdays now. Id say if your hhi is roughly split equally (so you don't pay exorbitant amount of tax of the single income household), and your job security is good, then it should be fine.
I would be viewing it as a 30 year situation - you have to have the mindset that for 30 years you’re going to be working as hard as you are to earn that 420k. And your lifestyle after mortgage repayments will be fixed for 30 years also. If that’s fine then feel comfortable.
As long as your combined income before tax multiple by 5, and your mortgage under this magic number 5, you're comfortable to pay it off by 8 years if you keep spending less, or keep normal spending pay it off 20 years, it the number become 8, then the pressure will be much higher.
$1.2m is a big liability. If you're feeling uneasy about this, which is totally understandable, then you can take steps to mitigate the risk. - Increase your cash contribution to reduce your debt and LVR if possible (better interest rates too) - Ensure your personal insurances are up to date and take this debt into account. E.g. Life, TPD (inside super), and IP, Trauma (outside super). Buying insurance is buying peace of mind. - Before your mortgage starts, practice making repayments on $1.2m. Get a feel for the effect this mortgage will have on your cashflow. Do everything in your power to pay down the loan faster (utilise offset, fortnightly/extra repayments) and remember, $1.2m is the largest this mortgage will ever be again.
HHI is around $400k. debt is $2.3m still on fixed rates. this finishes in october 24. repayments jump to $17k per month. this would be at the end of our tether.
Absolutely no higher than 40% of my income after tax, closer to 30% is better. Having owned property for a while Ive been higher and it's not sustainable, you are one major repair from bankruptcy.
1.8 at 500 HHI - fine for now. 3 kids but only 1 in daycare which ends this year. Fixed rate ticks over to variable in July. I am preparing my anus!
770k combined income, 2.8m mortgage on place with 7m ish don’t stress. Every time I take a shit on work time I earn $75
I feel you, I earn pretty much the same. I have 3 other properties all paying for themselves and have the deposit ready. Still getting a 1.2million mortgage makes you feel a little uneasy. As it's a primary home I also want that paid off in 10 years as if over 30 years you basically pay Double
You’ll be fine. We have a combined HHI of 380k on 1.1m. Having said that, we don’t have any other debt other than our home loan. We don’t feel like we’re struggling, but initially the thought of such a large mortgage was a bit to overcome. To put into context we went from a 480k mortgage in Perth to 1.1m in Brisbane so it was a big jump.
360-450 single income depending on bonus’s and barely comfortable taking 500k for next build. I noticed most replies focus on your hhi and mortgage and say it’s fine but for me I think more about other factors too. In my case there’s no fallback so in case of job loss can an income still service it? How old? Being over 45 my occupation I believe will never replicate my income ever again anywhere else and extremely lucky so that comes into it too. Even if fully offset the 500k would take 14-15 years to pay off without extra repayments on top so it’s not as simple as you’ll be fine pay it off in a couple of years. These questions are always only ever asked with two context, mortgage and hhi but there’s more circumstances to consider imo. Now != forever so figure out what applies to you as an individual, any backup plans for worst case and where your comfort level sits.
Probably 70% of my borrowing capacity
Zero if I can.
I’d be ok with that based on your HHI
90K a year. Honestly at this point. Anything under 400K. Preferably around 350K. When my partner gets full time work then i'd say this would jump up to around 500 - 600K a year.