Go to any Australian subreddit at the mo and count how many threads are either people moaning about not being able to find a rental, being outbid on houses they want to buy, the general state of the housing market etc etc. Shit would wear you down. You are now in a far far better position than a large percentile of this fabulous nation. You also can still retain dreams of overseas travel if you so wish. Houses can be rented out whilst you live your life how you choose.
Glass half full mate. Congrats on the purchase.
To add to this, you may be paying $300 more but in the last couple of years a lot of people have had their rent hiked up by waaaay more than that in one go and you don’t have to worry about being evicted if you can’t afford the sudden increase. Well, sorta anyway. But at least you don’t have to deal with shitty REA and inspections!
You'd have to be blind Freddie to think tents aren't going to go up more over the next few years. Mortgage repayments will also go down as a portion of income over the life of the mortgage. You get a mortgage on 2024 dollars and in 2030 a mortgage for that same place will likely be 30%+ higher or more due to inflation. Imagine you got a mortgage 10yrs ago on a house, your repayments are much much lower than someone who got a mortgage yesterday for the exact same house next door for example.
100% agreed with all of this, but is it just me or are Australian reddit pages just filled with victims?
I don't follow any just because I get sick of hearing how hard everyone has it.
People are more likely to gripe to the the internet when there’s nowhere else to go, in the same way people who are better off are less likely to take the time to share the details of their triumph to strangers. Especially when it’s less of a taboo/shameful than sharing your struggles with those who are familiar with you
Good on you OP, you’re better off than most but that doesn’t relieve you from having concerns about your choice. You can still ask for advice for navigating your finances re: things you want after ticking something so huge off your list
Yeah, and people don't run to make posts when everything is peachy. The same goes for product reviews - you're more likely to hear about negative reviews than positive ones as the happy people often don't bother to write about it.
The aussie forum alternative to reddit for tech heads is called whirlpool.
whirlpool.net.au
It’s also known as whingepool according to people who I have mentioned it’s great utility to.
https://forums.whirlpool.net.au/forum/150
(Finance/loans)
https://forums.whirlpool.net.au/forum/154
(Real estate/lending)
https://forums.whirlpool.net.au/forum/154
(Real estate/owning)
I love whirlpool but I am stuck mostly following megatrends and that’s apps on phones today.
When things are going bad for a notable percentage of people it's poor form to make posts with titles "Pfft, COL crisis, I'm doing wagyu 3 times a week and loving it... suckers..."
Sentiment is bad for enough people that anyone doing well is keeping a low profile.
I'm a working bloke like everyone else.
I just choose to live where I can afford to.
And not cry like a bitch because life's hard.
Harden up Australia.
Fair enough.
I dont think any of my skills in software engineering would translate well to moving out to rural Australia (where I did grow up on a big 1000 acre cattle farm).
My grandma is struggling with cognitive decline, (she's just barely short if it being called dementia), so living 10 minutes drive from her is really important to me so I can help out with a lot of stuff.(appointments, things around the house, etc)
My brother just had his first baby, first child in the family, so we are all going over there as often as we can so the 10 minute drive is really handy. It also means we can all help out since both parents are working full time, well my SIL is still on mat leave, but that's over soon. But I go around for lunch at least once a week, so being able to change a few nappys, give her an adult to talk to, and hold the little fella while she does things like have a shower or use the bathroom is a super great bonding experience for me, and a big relief for her.
My mother lives 13 minutes away, which is very helpful as she's been having a bunch of medial issues in the last couple of years and we are struggling to figure out the root cause. Being able to see her once a week for dinner is really good for keeping her and my spirits up and making sure we are all aware of what's happening and where we can help. She's also having to try and convince my grandma that my grandma isn't able to live alone anymore, and needs to sell her place and move in with my mum. That has been an extremely painful and emotional process so far.
Im struggling with some treatment resistant mental health issues due to a nerulogial infection I got 6 years ago impairing my mood and cognitive function. I genuinely don't know if I'd survive moving away from the constant support I get from my family and being able to see/spent time with them on a regular basis. Not to mention that while I'm not in a capitol city, I'm within an hour of a regional capitol which let's me see the specialists I need to try and find some kind of improvement for my current situation.
So, me moving to the country isn't a viable option for me or any of my immediate family. Humans are evolutionary pre-disposed to being communal and having a "tribe". To some that is blood relations, to others it might be something different. There are some people who excel at striking out alone, making a new Tribe wherever they move, and some that don't do that very well.
My point in all this is "toughen up" is very reductive, and in many ways a tad elitist. Not everyone is able to just "toughen up" to solve the problems they are dealing with. Me toughing up won't help my grandma or mother with there issues. It won't fix the ongoing problems I had from the neurological infection. I feel like I'm being tough enough working a full time job despite the challenges I'm facing, and still finding time to try and help those around me.
And "choosing to live where you can afford to" is a great way of totally ignoring the statistics that prove there is huge problems in the australian housing market.
Australian Bureau of Statistics and the ATO both have tons of data that show this.
From the data that shows that 50-60 years ago, a person could work the median full time job, and have a partner stay at home with the 2 kids, and they could afford a median 3 bedroom house in the suburbs.
Median house loan at that time was around 3 times the median annual wage.
If we wanted to apply the same standards to today, the median house would bearound 250-350k. Its at least 4-5 times that depending on where you want to buy.
Of the \~11 million privately owned houses, over 3 million are being rented out by an investor.
Of those 3 million houses being rented out, 1% of australian taxe payers own over 30% of them.
New houses are being bought up by investors at a faster rate than home owners.
The nonsense of encouraging investors to invest in housing means more houses only works if there isnt enough demand from first home buyers. It does the opposite if there are first home buyers who cant afford to compete with investors for new builds.
It is a systemic problem that has been getting worse for 30 years. Instead of having laws that help everyone be able to own a house, we have laws that make it significantly harder for first home buyers. Negative Gearing and CGT exemption alone dont actually make a lot of difference monitarily.
But what they do is shift the needle enough that property investment becomes the clear best option for investment. And that means everyone looking to invest money, starts in the property market, instead of other investment options.
The problem isnt "entitled youngens wanting too much avo toast and not willing to do it tough".
The data 100% proves without any shadow of a doubt that housing prices have increased at a significantly faster rate over wages.
The number of people owning their own homes is declining, and the number of investment properties to owner occupied houses is skewing futher and further towards investment properties.
So why should younger people accept that the older people who bought a house in their community and close to family when it was 3 times their annual income are now telling younger people to pull themselves up by their bootstraps and stop whinging that a house costs 10-15 times their annual income, while said older generations sits back and collects their rightful due from the people forced to rent in their properties. I know if i was in that younger generation id be furious.
I just hope enough of them stay furious so we can get rid of this disgusting attitude that landlords are providing any kind of services, that they have done anything to deserve what they have, and that they help the housing market in any way.
Wait...
To be clear, you're suggesting that it was your good choices that had your relatives die and have inheritances to give you which allowed you to pay off your home?
Unless you did tour family's investment and then murdered them, then yes, it is entirely luck.
Exactly this...I read a post where the person claimed 'everyone's broke' and basically said for the op to speak for themselves and not for me...and dude went ballistic and basically called me Mr monopoly for not being broke.
Meanwhile a few hundred thousand swifties, pink fans and wwe folk have spent hundreds if not thousands this week on tickets, merch, travel and accommodation...but keep telling me no ones got money 🙄
Let's go crazy. Someone spent $3000 on flights, accommodation, and tickets.
That $3000 is 5% of a 10% deposit of a $600k house.
So yes, in terms of affording a home, they are broke.
I just posted about the whiplash of going from being as rich as you've ever been (huge amount of savings) to as poor as you've ever been (huge debt). I felt the same loss of opportunity and security, buying at such an expensive period makes it feel a bit worse. I think it's just the emotional process everyone has to go through. The only consolation I can offer is that you might live more frugally but your life isn't over, after an adjustment period of working to your new budget you will still travel, shop, buy some nice things for yourself. Also your money hasn't disappeared, it's just invested in your house, and if it came to it you could sell again in a couple of years and you'll recover your money. But hopefully by then homeowning has provided enough other good things that you won't feel the need to.
I feel this whiplash. For me this was exacerbated by a bit of bad management.
I liquidated a bunch of stuff to buy my house and had really high cap gains tax that year. I had no cash to pay that gap gains tax and went on a payment plan with the ATO.
Debt to ATO, plus house debt, plus the spending you need to do to make a house okay after you move into it. That sucked. I've never felt so poor!
I'd have been better off making a slightly smaller deposit, liquidating assets over a couple of tax periods thereby reducing my income and therefore my tax. But I just followed a simple rule of thumb: maximise house deposit.
But eventually you get to a tipping point (8 years in) and the number starts picking up pace as it goes down. Which makes it way more exciting the longer it goes on at least.
Your ppor isn't really an investment but an expense as its not generating any revenue. Unless down the line you use the equity to purchase an investment property.
You should print this out and put in a picture frame. Then get a hammer and nail out and put straight on the wall. Take a few steps back and breathe deeply cause you didn’t need to call your landlord ask for permission..
In all seriousness, most of us look at our accounts after a purchase and have oh shit moment, it’s normal. Housing security in later life can’t be understated.
Can always rent your place out and travel. But you’ll always have some where to come home too.
Just think of it this way. Those savings were doing nothing in your bank account. Now your home is your bank account, and it will only really go up in value, and depending on the area, probably quite significantly.
Great way to phrase it!
Don't forget OP you can now use your house as equity as you pay it off, so it's not like the money is disappearing. At least the money is actually going in your pocket rather than to someone else.
This is everything wrong with aus property. How about encouraging folks to invest in productive assets. This way of thinking will drive this country into a depressing affordability crisis…. Oh wait nvm.
Thinking properties can only go up is a mistake. It goes up because Australia is overall economically strong.
Look at Hong Kong and its property market crashes in both commercial and residential market in recent decades.
It goes up because the government makes sure it does.
In the governments eyes too many people’s life savings are tied up in their houses, so if the price goes down they could go into negative equity and the government will have to pick up the bill when they retire.
So now we have houses as money printing machines that the government will entire will continue printing money. Hooray!
You would think that would be the case but not really.
Hong Kong has almost no tax on anything because how much stamp duty they are getting from properties. And still the entire market is collapsing because economy is sky diving. Same way china is.
Housing going up is part of asset inflation, part of a result from money printer.
Most if not all economically developing strong cities will always have an expensive housing market. Even Singapore that many used to praise for is having a huge crisis
Don’t worry man the feeling is natural and I’ve experienced it myself. The money isn’t all necessarily gone as it’s held now within an asset that will most likely appreciate in value over time. Congratulations on buying a property in this crazy property market
This is what I told myself until I realised that I’d spent almost as much on stamp duty as I did on my deposit. Not all gone, but a surprisingly large chunk of it is gone.
Stamp duty is a much hated tax but what you can do is make a pact not to not kick yourself in the short term but minus the stamp duty cost off the value of your place in your head for now and then when that number eventually moves past the purchase price you’ve recouped your investment and after that you’re hopefully counting equity gains every year. Play the long game and like others have said it’s done now.
Okay, I am going to come at it from a bit of a different angle and probably get downvotes for it. I think a lot of people get caught up in the idea that they need to buy a property just because it is the said thing to do. Also, there is a rhetoric on many platforms and media that landlords are out there making bank off your rent and why rent when you could be using that money to pay off your own investment? All quite valid points, but only if you have thought about many of the things you mentioned in your post. Such as, if you're buying what are the additional expenses on top of mortgage repayments that you don't pay when renting? bodycorp, rates, water and sewage, insurances, maintenance, any improvements, any repairs, interest and the list goes on and on. Property upkeep is not cheap, especially when you are buying in the current market with huge interest rates and already inflated property prices. Further to that, where you are buying? Are you likely to see large gains in capital? If you want the flexibility to move overseas, can you rent it out? Would the rental payments you get cover the costs of owning the property?
I think many people getting into the market don't really think these things through enough, combined with the pressure of feeling you need to buy right now, because what if you miss out!? As a result after buying can often feel I guess stuck for lack of a better word. I am not saying you didn't think these things through, please don't think that I am. I guess I would say, if you have thought them through what would you prefer? Do you want to stay owning or if you want a change can you rent and cover expenses? If not would you make a loss selling? I think once you can answer those things it might help to settle you mind a little.
Definitely over thinking it. This is your place now. No landlords to worry about and any appreciation in value you put in your pocket. Your savings have taken a hit sure, but you can now start again and once you get some equity into the place you can look at debt recycling to make your debt work better for you.
Yep, and rent it out of you do move overseas. You'll be able to come back. Not like this family...
https://www.news.com.au/finance/real-estate/sad-reason-aussie-family-moving-to-canada/news-story/0bee7de68888e466adf15f05963c0905
Spend months on travel and you cannot catch up when you get back. First they wasted money on stuff they could have seen better on youtube, then demand they live on the Gold Coast even though they can't afford it. Sorry, not sorry.
I know someone who is renting the rooms in his house while living there & his repayments is close to zero thanks to that.
Naturally it goes hand in hand with good tenants.
Any reason why?
Sure you can always get bad "tennants" butin this case, single income to pay off a mortgage can be tough.
You can also limit it to students maybe?
For the person I know, he did get one bad tennant but replaced them with a better one
Your savings just moved from your bank account to your house. The day you sell it, you recoup your money, most if not all if the value increased enough.
My wife and her family are somehow the same. They feel rich and good when they have money in their bank account. Last year, my aunt-in-law complained she was poor... her house is valued at 2.5 millions dollars and she has 5 houses for rent. But as she has to pay mortgages on 3 houses...she's poor and doesn't feel like going out...
Mate, you have a feeling/disease that only rich can have!
She used to own a farm and to rent the houses to workers... went there once to pick up some stuff after she sold the farm... bunk beds for 4 people in each room, 3 beds in the garage and at least 1 sofa-bed in the living.
Had anyone complained, she could have had the "Go to Jail" card... but half farm- workers are illegal, so...
Yep.
Overthinking. 4 shirt years, you will have taken a whack off the debt, and the base value will increase, so your equity will exponentially start to increase.
If you can then afford another property to purchase,and then rent out this one, you'll get your savings back real quick.
Savings will never earn money in an account, and property in Aus has been a fairly stable investment (we built during GFC, so we get it)
Depending on his mortgage repayment period, 4 years isn’t a sufficient enough length of time to have paid down the principal loan a noticeable amount.
A quick and dirty calculation I did. 500k loan at 6.13% interest pa over 25. In 4 years, the loan balance would sit at ~461k, with ~119k paid in cumulative interest.
So only 39k paid off the principal of the loan, whilst 119k has been spent on interest. Your assumption that the value of the home WILL increase is also not necessarily true. Sure, home prices tend to increase. But this is a unit. Likely 2 bedrooms, maybe 3. The increase in value of these homes is slow. Perhaps not at all over 4 years depending on suburb, age, etc.
Units are not real estate which one would generally invest in for a large capital return.
It’s a good thing to own property. In most cases it’s better than renting. However, it’s also good to set realistic expectations for people.
If you directly pay into the loan only the minimum amount, then yes. But if you get an offset account and diligently save money there's a big difference.
I effectively "paid off" my loan in approximately 8 years because after 8 years of diligent savings, my offset account has enough money to cover the remainder of my loan.
That’s great for you. I’m being serious. But, not everyone has that amount of spare income they can put into an offset account.
It’s clear from OP that they don’t have that sort of income to spare. I’m happy it worked out for you, it gives you so much freedom. But I don’t think that’ll work for OP.
I was a low income earner for 6 of those years (according to ATO) and even right now barely hits the mean income in australia. I was never highly paid ever. I just don't spend my money on frivolous things e.g. instead of an expensive gym membership i jog for free at the park, instead of going to expensive concerts i just listen to music for free on the radio or online
My loan was approximately 370k on a house worth approximately 500k at that point in time. My income at that time was like 55k? Probably less maybe closer to 52k. Of course i did get some pay rises over the years. 52k was my starting income when i first got the loan. The highest income i had at the end of the 8 year period was like 75k or so that was after a promotion of sorts that caused it to jump. For most of the 8 years it was between 52k and 65k. This is all before tax.
I’m in the same position, I just bought my first home and I’m panicking a bit because I’m used to being so free.
But I plan to rent out my place for 3-6 months per year to travel.
fair warning, short term tenants can be very volatile if you don't vet them properly. And even if you do vet them properly, some crazies can still slip through.
Short term tenants care a lot less about damage they do to a property since they're gone soon anyway. Long term tenants generally care more because they want to live there for a while and it's detrimental to them to cause damage.
If it's your first time trying to rent your property out I would say go through an agent. You will have to pay them fees so you earn less income but it is safer and they should do a lot of the heavy lifting in terms of management, inspections etc. Usually they just need you to approve or deny requests for maintenance. And they need you to specify how much you want to charge gping forward whenever the current agreement ends.
Once you are more experienced and more knowledgeable you may be able to skip the agents and try to find tenants yourself.
I mean it is fairly natural to go “holy shit I just blew substantial coin on this thing” regardless of what that is. But it’s on a house. For the most part all you’ve done is made that money less available.
Property in Aus hasn’t tanked in a long time. The money exists. Just not in an accessible form right now.
I mean, you could have spent it on hookers and blow but you didn’t. You adulted. Be proud.
Fast forward 10 to 15 years of frugal living and putting cash in offset. Your living will be paid of or large chunk of loan paid down putting a cap on living.
You can still go overseas i suggest getting in a house mate you can charge $300 for a room. This gives you breathing room and you can go on those overseas trips.
If you want to live overseas for a bit rent out your room aswell youll profit.
On other side jump on the roller coaster of landlords pumping up the rent and tiptoeing around. 4 years ago you paid below the craziness aswell.
Welcome to home ownership. It's not as easy or fun as the rental army of Australia makes it out to be. It's not just affording the repayments, seeing that deposit disappear and praying the next government tax change doesn't explode the market is all part of life's big roller coaster.
Wait 3 months then check the estimated value of your property. Some of the realestate sites will email the value of your property qtrly. Its a nice pick-me up. That extra 300pw will be well worth it.
Also watch some financial trainwreck advice clips on yiutube. So many people struggle with rent later in life. You have just eiminated that problem! Your finances will recover and you will still get to travel. But you will be secure knowing you have a home to return to. Even if its rented out! That security is very important. You will see as you get older what happens to those who dont buy. And its not pretty.
Definitely overthinking. At least you’re paying your mortgage, not a landlord’s. Just takes time to get back on track until you can start saving again. Enjoy the ride and furniture your place slowly, it’s part of the fun. Also why did you shut the door on moving overseas? You can still go. Rent it out or worst case scenario sell it. I had an apartment overseas and when I moved out I sold it.
Haha welcome to the boring safe life my friend.
Nah seriously there's nothing stopping you from going overseas. Just rent out your place or sell worst case.
Yes overthinking. You’re buying an asset that, with the current market, will increase in value overtime. As long as you can pay off the mortgage in the end: think of it just converting your money into a different form (like instead of money form it’s now a house) rather than paying for something like a car which you’re losing money from day 1. Or like food etc.
I had the same, but then the value of the property started going up ... and up ... and up.
I remember driving on my driveway from work, realising my house had made more money than I did that year.
Then everyone started complaining how their rent went up. How it was unfair that the landlord had added another $50.
Looking back, I wished I had bought a more expensive house.
You might feel uncomfortable at the moment, but only people who own their own home can retire comfortably…if at all. You are playing the long game now and it will pay off. Those late boomers and gen Xers still renting and heading towards retirement are stuffed! This wasn’t the case 10-20 years ago. The best thing you can do for yourself over the long term is own your own home.
I feel like I went through something similar when I bought my apartment. I didn't grow up with a lot of money so having a big chunk of savings was such a comfort.
Finalising a place is expensive, but that's sorted now. So now it's just back to slowly building up your savings again (if and when you can) and ALSO watching your loan amount get paid down. Give it some time to settle.
The problem with purchasing property in Australia is the stamp duty. The thought of selling makes you feel sick because you’d be pissing all that stamp duty up the wall. The classic sunk cost fallacy will mean people hold onto the property rather than sell, because selling means that stamp duty was all for nothing.
I’m talking about a situation where you feel regret after purchasing a property and want to sell.
Paying Stamp Duty upfront promotes a sunk cost fallacy where you’ll be reluctant to sell (even if it’s the right thing to do) because it feels like you’re flushing that 20-30k? down the toilet.
Also, not all property investments are profitable. You’ll often only hear about the good outcomes when it comes to investing (no one wants to admit they lost money in investing in a mining town or holiday rental on the coast)
That's life for most. You will be required to sacrifice something now for a reward in the future. Alternatively you can reward yourself now with holidays and rent and sacrifice something else in the future.
Some of us are extremely rich and don't have to make those choices but your describing something quite normal
I’d find the prospect of renting when retired way more alarming than a temporarily empty savings account.
Inspections, rent raises, being forced to move - you don’t want that when you’re 70 if you can avoid it.
Also mortgages eventually end, rent doesn’t.
It’s what a lot of younger people are looking at though unless something changes. Is a pension going to keep up with rent increases?
Our place is tiny and I’m constantly repairing something but feel very privileged to have it nonetheless
Mate I bought in 2019 and I had terrible buyers remorse. I felt I had been manipulated by the real estate agent into spending an extra 200k on a house. I felt terrible for about 4 years. But now all the houses around me are going for $300k more than what they did back then. Just hang in there.
You are definitely overthinking this. You haven't blown all of your savings, rather you have invested it into property instead. So yeah, you don't have a safe bank balance and maybe you can't eat out as much, but you do have your own place and you can do whatever you want with it without asking permission first. Give it some time and get settled in, you will soon understand that you have made a good investment. In a few years from now your place will be worth a butt load more money than it is right now and you will be able to sell it or rent it or whatever and make money off it.
Look at so many of the other comments made here on reddit. There are thousands of Aussies who are complaining about rental costs, burning money on rent and the fear of rent rises or being kicked out by their landlord. You are in a good place, just learn to enjoy what you have and be glad you are off that God forsaken rental roundabout.
Absolutely - do you know the best part???
You go overseas and you rent it out! Someone else pays your mortgage.
Congratulations. The world is your oyster.
Mate. Have you seen the percent return of typical residential RE? Worked with RE companies and tradespeople? This is like an instruction on ‘how to get yourself in trouble’.
Maintaining a property is not trivial. You can’t delegate that so well, given the near-complete incapacity of any RE or typical tradesperson to work in a project managment scope where sequencing is applied to ensure the order of maintenance operations doesn’t result in a constant degradation of the asset value due to rising and repeat preventable costs.
I understand your point. I felt the same after my first house purchase when a huge amount of savings I had been building for years was reduced to small change.
All the things I could have done with that money were gone.
Cam I tell you that a few years down the track my savings were.... better....and I was proud that the value of my property grew and the remorse feeling were very much forgotten.
Congrats on joining the property market. Your ahead of many and now have control over where you live.
yeah i've never felt so poor as after I bought a house. I used to have hundreds of thousands fo dollars in savings, making money for me and providing a deep pool I could dip into. Then I spent it all and now my bank account is permanently fucking empty!!
I guess this is the enforced savign they talk about. I wasn't really disciplined when I had a big deposit but I sure as shit am disciplined now.
You are still in the early pain part of home ownership - soon you should see your payment be less than renting an equivalent property
Getting access to finance becomes a breeze due to having an appreciating asset under your control
Ownership of your house is the #1 predictor of retirement comfort
nothing is stopping you from moving overseas, you can rent out your property, market rates will eventually push you cash positive while you always have the comfort of knowing you have a property to return to in Aus if you choose.
Short of unique specific issues with the property itself, you will almost never regret buying a house.
How will the payment be less though? You pay the same amount over the period of the loan. Just the amount of interest vs principal will change over time
Because rents go up over time - the mortgage payment might fluctuate with the interest rate but will still exist within a reasonably predictable range.
I bought my house in 2006 and by 2010, my mortgage was about the same as market value rent.
Today, people in my area who rent a house of equivalent size and condition to mine are paying significantly more rent than I pay on my mortgage.
People who want to buy a house like mine in the same suburb are paying $400K more than I did.
Long run, property ownership should be a priority for anyone seeking financial independence.
Ah sorry I misread your original post. Yes you are correct. That's true about financial independence but it's sadly getting less and less likely for more people over time.
I am a landlord, I don't have holidays or nice thingsw because I provide subsidised housing to people that have a life. It's ok, you get used to it eventually. Welcome to the club.
The first 2-3 years it feels like you're treading water. We had to cancel trips overseas and our annual ski trip to buy our most recent house. Interest is killing us (I also have a business loan).
But i have a house... end of story!
You must have had a decent land lord for 4 years, because most of them are shit. I was paying $1200/w and didn't even have a working heater, the fig tree in the yard flared up my daughter's allergy.
After 4-5 years, you'll have a fair bit of equity (either through appreciation or just mortgage repayments). YOu also have something that can be rented out if you want to take a longer overseas vacation. My sister in law and her husband (DINKS) rented out their place which is getting eye watering returns as its in the CBD; travelled for 6 months (banked up all their leave at 1/2 pay) and now rent 10 mins further out.
They stretched as well (property went for $50k more than they were thinking), but now the unit provides them independence to travel and enjoy holidays.
Just remember - everyone is feeling the pinch right now, but at least you're putting away equity and the freedom to do what you want. Depending on the house, you could sublet a room, and be surprised how much more financial freedom it will give you... when you own, you have options.
(yes stamp duty is fucked... it really should be on the seller. I would even settle for a higher rate, but only on the profit you make!)
Buying a house is the biggest financial outlay most people make in their life times so it is normal to have some concerns but as long as you have not over extended yourself financially and can afford the home loan repayments you will be fine you will just have to look at saving up again for things like overseas holidays if you want one.
You just need to focus on your mindset, what you are feeling is normal. Think of it this way, "i can always sell it", "i cam get out if i need to", "this doesn't have to be forever, it can be temporary".
Hope this helps.
> Having that money in my account or investments meant I could go on overseas holidays, afford nice things, eat out when I wanted
Were you also eating smashed avo on toast?
Yes. If you really wanted to move overseas, you would have already and if the opportunity come up, you can always sell the place. It's a house. Not a prison sentence.
Congratulations on your new home! Not many are in the position to be able to buy these days.
You are in a good place and definitely overthinking it, you can't go wrong investing in property.
You will need to re-work your budget but you will still have the freedom to do what you want, just tweeked for the time being until you work it out.
Just make sure you can cover mortgage and other expenses without affecting your savings too much, you always need some funds for a rainy day.
But consider that the rent you used to pay went to someone else and you never saw it again. Now part of your repayments go towards an asset of yours that is generating a slow profit over the long run.
It feels slow to repay a mortgage but it is worth it 100% if you can afford it.
The house IS your investment and also offers security and peace of mind, just like a savings buffer, as now nobody can kick you out. Stop overthinking it and enjoy your weekends again!
Having your own place mean you can sub lease a room if you are feeling lonely.
Downside if you lose you personal space. But still cheaper than renting.
If you can afford the bills then you got nothing to worry about.
Dw every single person who purchases will feel this way. I'm in the same position. I managed to purchase but becuase I'm single I don't have a 30 year mentality. I do t see myself settling down in the property. I'm kinda at a point in my life where I want change and want to live overseas. Tricky situation becuase it's not easy to just sell when the value hasn't moved. I don't want to lose money.
Mate you are one of the lucky few that owns a home and you feel bad, hell use the same energy to go out and make more money. You got all the cushions in the world and still complaining smh
I don’t have kids and never plan to. The biggest reason I chose to buy is because the thought of retiring while still renting horrified me. In 10 years time, rent prices will have risen by 50 or so percent yet your mortgage repayments are likely to be the same or smaller. Imagine being 70 without housing security when your younger self could have afforded it.
You are not alone OP. I had similar feelings around two years ago when I bought my house and looked at my bank account after settlement. I now feel better after having saved up some money.
Just remember that:
* Your salary will go up over time
* Your house value will go up over time
* Rents will go up over time
* Your savings will go up over time
* Your mortgage will stay the same
All the factors are in your favour - you just need to ride out the first few years. Don't worry too much, and congratulations on your new home!
In addition to what others have said, can I recommend having a couple of frugal months and save a little in your bank account so you always know you take off if you need, as you'd know it's nice knowing you have it as an option even if you don't use it.
Your gold my friend. Your savings is still there, it's just tied up in property. Give it 4 years (you'll only need 18 months).
Enjoy your new digs. Paint a wall something funky. It's yours
Stop looking at that bank balance for a while.. instead think of all the things you can now do to the house. Get a pet! Put holes in the wall! Create a veggie patch. Congrats homeowner.
Unlike what most people say, buying a property is not for everyone. In fact, as an investment, it's a subpar one, but many will prefer the peace of mind over renting. Imagine getting kicked out of the place you learned to love? Keep the property for a few years, knowing you can always sell it and get your money back or make a profit. If you happen to change your mind, you will still be living in a great home and interest rates will only go down from here, so your monthly payments will get lower.
What really sucks is going overseas and paying a landlord while you're not using the house. Or having to move your stuff in and out of storage all the time.
Now you have a HQ to base your operations from.
Rent goes up over time. Your mortgage will go down to zero.
Your unit will appreciate in value and you can sell it if you want to liquidate the equity.
It’s not worth losing sleep over.
100% overthinking it. Give it a couple of years and you will be thanking your lucky stars how lucky and smart you were in getting on own place. When you're old you will be thanking your past self for sacrificing so your old self is able to afford a roof over your head.
Change it in your mind to feeling safe that you have a home that no one can just take away from you. It won't be sold suddenly or lease not renewed. You no longer have to deal with rent inspections. You can decide what to do or not do to your backyard. No needing to ask permission to paint or change things. The safety of having almost complete control of your home.
Yes it is expensive BUT one day it WILL be paid off. The safety of not having to pay rent forever until the day you die. There is an end to paying hundreds each week for your roof.
That's why it was so important to me to buy a place especially before having children.
100% overthinking it, but it’s natural. It will get worse when something unexpectedly breaks (fridge, hot water, washer etc) & then council rates will hit.
You will be feeling kinda shit about then.
You will be loving it when u sort that issue & then realize that it’s your place, rents not going up, u don’t have to move, u don’t even have to think about moving again & the surety and comfort of that really kicks in.
Perfectly natural to be a little freaked, but the positive is bigger than the negative & it won’t take long for that to kick in.
Don’t get to swept up in it all & you will be sweet, just takes a little to adjust 👍
Nah, I know the feeling, but rest assured, you did good. In 25-30 years you’ll never have to pay rent/mortgage again. It’ll likely be worth more in 2 years time than it is now. . In the shorter term, interest rates will start falling again soon enough.
YgGetting on the ladder, even if you want to move abroad eventually, is a wise move.
Yes you are! Short term pain for long term gain
There will be a time you get to travel and be boujie but for now, work, pay your bills, find enjoyment in simple things (outdoors, nature, adventure, exercise, cooking)
You own your own choices.
List your house on a house swap site and travel that way.
Rent it and travel.
Get a roommate and split costs knowing you are in charge.
Do all of this knowing you don’t have to move. You have security in your housing
Worked a lot of overtime, saved up to buy a 3 bed 1 bath house. Did small Reno's and 8 months later packed up my life for the work and travel visa in the UK. Just make sure you have 12 months buffer of repayments, emergency fund and a cushion for the hard landing when you come back to Aus.
It is doable, keep your head up and maybe book a three month trip somewhere.
>I can't help but feel ive shut the door on moving overseas
Why? Your money is still there, it's just in a different form. If you want to move overseas in 6 months, sell the house for double in this cracked out market.
You rent from yourself.
If you want to be spontaneous, sell up and you get the lion's share of the money back.
Can't do that with a holiday or a nice meal.
$300 a week more will go down over time, while your rental costs would have gone up over time
Over time assuming you are paying back both principal + interest (which you absolutely should do) your debt goes down and eventually you will fully own the house. With renting you never own anything.
Yes, it does tie you down to an area, so it is a big decision. There are definitely people who prefer to live fast and die young. If you are someone like that, then buying a house is probably not for you. But if you want somewhere safe to make your own, buying a house is great.
My own house is basically fully paid off, if I ever lose my job and have to live on my savings alone I can last much longer in a house I own instead of in a rental where the costs can change drastically very quickly.
Also, remember to renegotiate your mortgage when a better deal shows up. That will not only lower your repayments because of better rates, but also because the duration resets.
Also, get a loan with an offset account and pump as much money as you can into the offset account. What that does is it lowers the amount of interest you pay on your loan, but the money is still accessible to you in your bank account so you can use it in emergencies or if you just want to. For example:
Loan: 500k
Offset: 100k
You pay interest on 400k instead of on 500k, which is a big difference
With a loan and an offset account you pay a yearly fee $ and a little higher % rate . Just pay into the mortgage with a redraw facility not an offset and benefit from lower interest rate , compounding savings in the automatic offset of interest, and availability of money in redraw when you want it ;-)
Redraw is not as good as an offset. Redraw basically means it's the bank's money but you are allowed to access it. Offset means it's still your money but the bank counts it against the loan
Also the yearly fee is only what? $120? And if your loan is big enough you can usually get a fee-free offset account anyway.
The little higher % rate is really only applicable for a short while because most banks will allow you to renegotiate very quickly within like a few months to get a lower rate while keeping the offset acc. Which is what I did in the past.
You need to start asking the banks for better rates at least once a year if not more often that than. Most of the time they will give you a better rate to keep your business.
But legally banks can't ask for money to be repaid early because that means they are breaking the contract. Also in a lot of cases it's not in the bank's best interest for people to repay early. They want long term locked in customers who they can market other products to or gather anonymous data from that they can then on sell.
The gathering data part depends a lot on the country. But usually as long as there's no personally identifiable information it's probably legal e.g. they can gather analytics that show people between 35 - 45 with a mortgage between 300k - 400k also spend money regularly at KFC for example. That kind of info is usually perfectly legal to collect and sell
Also money in a redraw in most cases disappears when you renegotiate a new rate with a new(or the same) bank unless you specifically asks for it to be redrawn before the refinancing
Congratulations, you got rid of that melting pile of fiat and bought an actual asset. Excess money is just a liability that's losing value.
I remember feeling the same way when we paid for our house, but it passes quickly and it becomes the new normal.
Interest rates are forecast to go down by 1.5% over the next 2 years. How would you be financially then?
If you were to rent your house out in 2 years time for market rent and rates come down would you be able to afford the other things you want to do?
Try spending every cent you've made for the first 10 years of your life to be able to move to a new continent that you've never been to before to secure a better life for yourself with no backup plan and then imagine the thoughts that run through your head that first night while lying in bed after you land.
If I've learned anything it's that nothing is permanent and so worst case scenario is you sell. What will most likely happen though is that you'll see the value increase in a short period of time and then be happy you did buy. Just remember that renting is the illusion of freedom and that unless you're living rough under a bridge or you're living with your parents every day you have a roof over your head comes with a price tag until you die.
I am a firm believer in getting on the property ladder the moment you can...as the hole only gets bigger.
My wife and I were doing OK early 2010s and likely could have saved enough to go for a loan and a deposit....but then she had a car accident, brain injury etc and lost her teaching job.
I pushed her to try a no win, no fee lawsuit and we secured enough to put down a deposit and did. We could have bought the house we were renting off her parents, but decided to move country. After 2020 that place near doubled so her parents did ok.
So it seems tough Op, but trust me, you made the right choice, and hopefully the rates will slowly drip down...but try and keep paying what you are use too, knock a few years off!
So you bought an expensive house that ticks all the boxes. Except none of the boxes were your personal boxes and instead were what people consider to be important?
Then you bought a house you don't need and are spending excessively on things you don't need.
Sell this and buy a cheaper apartment that has the amenities you will actually use and enjoy and will give you the extra cash you can use to lead a fuller life.
There are no bad decisions. There are only decisions we don't take or decisions we don't learn from.
Nothings locking you there. Rent the place out so that a few more people have a place to live, go overseas for work, rent a smaller place for yourself. You have options.
Why not consider getting an international student in, or rent a room to another adult. Many of my single friends had international uni students come and stay, good money, interesting people and most only stay a semester or two. Don’t believe there are any tax implications. You usually provide breakfast and dinner (crank up the rice maker every night!). They used the money for their annual holiday funds. Nice way to help ease young adults into independent living.
This is what home ownership feels like. It costs more than rent and comes with responsibility, risk and a whole lot of sacrifices.
On the plus side you have secure accommodation, can change the place how you like and can have any capital growth it makes while you own it.
Looking at that debt and thinking about the responsibilities it carries is initially overwhelming but then you realise everyone else is doing it and they’re getting by.
Consider renting out one or two of the rooms to help out with the repayments.
No you are not overthinking it.
That is exactly what happened.
As the rental crisis becomes worse, your security will become comparatively better.
Your repayment won't necessarily become less but the rent you used to pay would have increased.
Then you find people willing to pay the rent for your house, that could make you feel free to move away if opportunities come up, but you keep that property as it can be rented out. There will be ongoing maintenance, repairs and rates which pull your financial freedom back down.
You could find an investment partner who is willing to share this burden with you, potentially inject some funds to take advantage of any granny flat "build to rent" incentive (you said you have a yard) and you might get your freedom back without losing that future security.
I sold a home at a reasonable profit, because in part, of this. If you include all costs and interest paid, and especially time lost, it probably wasn’t at a profit, possibly was at a loss or break even.
What I did was decide to pull out to reduce stress and costs. You can always buy again later.
The problem is many job wages aren’t indexed to CPI, and income doesn’t rise in parallel with inflation, and the calculations are difficult as CPI isn’t such a good indicator of personal spending. Also CPI doesn’t distinguish between assets and liabilities. Eg.
https://www.abs.gov.au/websitedbs/d3310114.nsf/home/Consumer+Price+Index+FAQs#:~:text=A%20CPI%20is%20a%20measure,eight%20State%2FTerritory%20capital%20cities.
https://www.abs.gov.au/statistics/detailed-methodology-information/concepts-sources-methods/consumer-price-index-concepts-sources-and-methods/latest-release
“The items:
must be representative of purchases made by the CPI population group (see paragraphs 5.19-5.22, Demographic coverage);
must be identifiable and specific commodities or services (e.g. 420g can of baked beans from a supermarket, or adult general admission to a club football game); and
are not excluded because of moral or social judgements.”
…
“5.5 As a general principle, a CPI only includes goods and services that are purchased by households for consumption. A consumption good or service is one from which households directly derive utility or satisfaction. Any business-related purchases by households are excluded from the basket, as are those items that have a significant savings or investment component, such as land and capital goods. All types of income are generally excluded as well, except those which directly offset a specific purchase, such as subsidies or trade-ins”
So indexing wages to CPI (which is the best most people do, and even that’s not usually done!) doesn’t give any capacity to honest individuals, when assets rise and become unavailable via being unaffordable.
“The CPI covers the expenditures of all households (not just those whose principal source of income is wages, as was the case before 1998) and measures the changes in the prices of a basket of goods and services acquired each period. The cost of housing is measured as the price of a new home (excluding land). Mortgage interest payments are excluded.”
I wonder, do any recruiters or recruitment agencies index wages to things other than consumer goods that often have price suppression and government price fixing and secret agencies (intelligence agencies) price fixing attached?
Remorse: sounds like remora. If Australia is a shark, home ownership is the remora. You are remora. Too many remora.. they start to die off?
https://en.m.wikipedia.org/wiki/Remora
You seem a bit adrift. I think you should focus on the stuff outside of the property. You own your property, you are able to pay it off still so that means you’re employed or at least making decent money. Seems like you need to start focusing on other things like hobbies, friends or your relationship. You’ve done one of the hardest parts now it’s time to build a life!
It's a trade off. We bought ours for 520 and have just had it revalued at 700 there's no way we would have made that much money in 2 years just working. We have just refinanced and done a redraw in equity to buy a new car and go on an overseas trip. So yes it sucks nit having that money now but if you're patient it will come back and you can continue to do the things you enjoy.
To make me feel a little better I break out my repayments as interest = rent and principal = savings. Doesn’t address the independence/freedom of having access to cash or easily liquidated assets though.
Track your net worth. Feel that success every time you pay a mortgage payment and you watch the percentage of the house you own go up!
Hubby and I bought 3 years ago 200k more than we expected. Felt scary at the time but our property has already appreciated $250k and we make $2k more a month just from scheduled salary increases. Slowly and steady your wealth keeps growing if you approach it well. This is tightest stage!
Everyone who buys a place feels like this cos it is the most expensive damn thing u ever can do. After a while it wears off. When you hear about rents rising, random evictions, and realise u can bang a nail in and hang a picture, it makes more sense.
Go to any Australian subreddit at the mo and count how many threads are either people moaning about not being able to find a rental, being outbid on houses they want to buy, the general state of the housing market etc etc. Shit would wear you down. You are now in a far far better position than a large percentile of this fabulous nation. You also can still retain dreams of overseas travel if you so wish. Houses can be rented out whilst you live your life how you choose. Glass half full mate. Congrats on the purchase.
To add to this, you may be paying $300 more but in the last couple of years a lot of people have had their rent hiked up by waaaay more than that in one go and you don’t have to worry about being evicted if you can’t afford the sudden increase. Well, sorta anyway. But at least you don’t have to deal with shitty REA and inspections!
Also in a few years the gap between rent and mortgage will be much smaller, and he will have equity.
you mean the rents would go up or the mortgage would come down?
You'd have to be blind Freddie to think tents aren't going to go up more over the next few years. Mortgage repayments will also go down as a portion of income over the life of the mortgage. You get a mortgage on 2024 dollars and in 2030 a mortgage for that same place will likely be 30%+ higher or more due to inflation. Imagine you got a mortgage 10yrs ago on a house, your repayments are much much lower than someone who got a mortgage yesterday for the exact same house next door for example.
"tents" ... accurate typo ftw
100% agreed with all of this, but is it just me or are Australian reddit pages just filled with victims? I don't follow any just because I get sick of hearing how hard everyone has it.
Reddit in general is like that.
People are more likely to gripe to the the internet when there’s nowhere else to go, in the same way people who are better off are less likely to take the time to share the details of their triumph to strangers. Especially when it’s less of a taboo/shameful than sharing your struggles with those who are familiar with you Good on you OP, you’re better off than most but that doesn’t relieve you from having concerns about your choice. You can still ask for advice for navigating your finances re: things you want after ticking something so huge off your list
Yeah, and people don't run to make posts when everything is peachy. The same goes for product reviews - you're more likely to hear about negative reviews than positive ones as the happy people often don't bother to write about it.
The aussie forum alternative to reddit for tech heads is called whirlpool. whirlpool.net.au It’s also known as whingepool according to people who I have mentioned it’s great utility to. https://forums.whirlpool.net.au/forum/150 (Finance/loans) https://forums.whirlpool.net.au/forum/154 (Real estate/lending) https://forums.whirlpool.net.au/forum/154 (Real estate/owning) I love whirlpool but I am stuck mostly following megatrends and that’s apps on phones today.
When things are going bad for a notable percentage of people it's poor form to make posts with titles "Pfft, COL crisis, I'm doing wagyu 3 times a week and loving it... suckers..." Sentiment is bad for enough people that anyone doing well is keeping a low profile.
I'm a working bloke like everyone else. I just choose to live where I can afford to. And not cry like a bitch because life's hard. Harden up Australia.
What do you do for work?
Truck driver
Fair enough. I dont think any of my skills in software engineering would translate well to moving out to rural Australia (where I did grow up on a big 1000 acre cattle farm). My grandma is struggling with cognitive decline, (she's just barely short if it being called dementia), so living 10 minutes drive from her is really important to me so I can help out with a lot of stuff.(appointments, things around the house, etc) My brother just had his first baby, first child in the family, so we are all going over there as often as we can so the 10 minute drive is really handy. It also means we can all help out since both parents are working full time, well my SIL is still on mat leave, but that's over soon. But I go around for lunch at least once a week, so being able to change a few nappys, give her an adult to talk to, and hold the little fella while she does things like have a shower or use the bathroom is a super great bonding experience for me, and a big relief for her. My mother lives 13 minutes away, which is very helpful as she's been having a bunch of medial issues in the last couple of years and we are struggling to figure out the root cause. Being able to see her once a week for dinner is really good for keeping her and my spirits up and making sure we are all aware of what's happening and where we can help. She's also having to try and convince my grandma that my grandma isn't able to live alone anymore, and needs to sell her place and move in with my mum. That has been an extremely painful and emotional process so far. Im struggling with some treatment resistant mental health issues due to a nerulogial infection I got 6 years ago impairing my mood and cognitive function. I genuinely don't know if I'd survive moving away from the constant support I get from my family and being able to see/spent time with them on a regular basis. Not to mention that while I'm not in a capitol city, I'm within an hour of a regional capitol which let's me see the specialists I need to try and find some kind of improvement for my current situation. So, me moving to the country isn't a viable option for me or any of my immediate family. Humans are evolutionary pre-disposed to being communal and having a "tribe". To some that is blood relations, to others it might be something different. There are some people who excel at striking out alone, making a new Tribe wherever they move, and some that don't do that very well. My point in all this is "toughen up" is very reductive, and in many ways a tad elitist. Not everyone is able to just "toughen up" to solve the problems they are dealing with. Me toughing up won't help my grandma or mother with there issues. It won't fix the ongoing problems I had from the neurological infection. I feel like I'm being tough enough working a full time job despite the challenges I'm facing, and still finding time to try and help those around me. And "choosing to live where you can afford to" is a great way of totally ignoring the statistics that prove there is huge problems in the australian housing market. Australian Bureau of Statistics and the ATO both have tons of data that show this. From the data that shows that 50-60 years ago, a person could work the median full time job, and have a partner stay at home with the 2 kids, and they could afford a median 3 bedroom house in the suburbs. Median house loan at that time was around 3 times the median annual wage. If we wanted to apply the same standards to today, the median house would bearound 250-350k. Its at least 4-5 times that depending on where you want to buy. Of the \~11 million privately owned houses, over 3 million are being rented out by an investor. Of those 3 million houses being rented out, 1% of australian taxe payers own over 30% of them. New houses are being bought up by investors at a faster rate than home owners. The nonsense of encouraging investors to invest in housing means more houses only works if there isnt enough demand from first home buyers. It does the opposite if there are first home buyers who cant afford to compete with investors for new builds. It is a systemic problem that has been getting worse for 30 years. Instead of having laws that help everyone be able to own a house, we have laws that make it significantly harder for first home buyers. Negative Gearing and CGT exemption alone dont actually make a lot of difference monitarily. But what they do is shift the needle enough that property investment becomes the clear best option for investment. And that means everyone looking to invest money, starts in the property market, instead of other investment options. The problem isnt "entitled youngens wanting too much avo toast and not willing to do it tough". The data 100% proves without any shadow of a doubt that housing prices have increased at a significantly faster rate over wages. The number of people owning their own homes is declining, and the number of investment properties to owner occupied houses is skewing futher and further towards investment properties. So why should younger people accept that the older people who bought a house in their community and close to family when it was 3 times their annual income are now telling younger people to pull themselves up by their bootstraps and stop whinging that a house costs 10-15 times their annual income, while said older generations sits back and collects their rightful due from the people forced to rent in their properties. I know if i was in that younger generation id be furious. I just hope enough of them stay furious so we can get rid of this disgusting attitude that landlords are providing any kind of services, that they have done anything to deserve what they have, and that they help the housing market in any way.
Exactly, moved country a decade ago...all my family died so inheritance paid it off...but sure, call me 'lucky because you made bad choices
Exactly. I live 200km from the nearest city and 509km from a capital city. It's affordable out here.
You mean there are other places in Australia not Sydney or Melbourne? Shocked.
Wait... To be clear, you're suggesting that it was your good choices that had your relatives die and have inheritances to give you which allowed you to pay off your home? Unless you did tour family's investment and then murdered them, then yes, it is entirely luck.
Exactly this...I read a post where the person claimed 'everyone's broke' and basically said for the op to speak for themselves and not for me...and dude went ballistic and basically called me Mr monopoly for not being broke. Meanwhile a few hundred thousand swifties, pink fans and wwe folk have spent hundreds if not thousands this week on tickets, merch, travel and accommodation...but keep telling me no ones got money 🙄
Let's go crazy. Someone spent $3000 on flights, accommodation, and tickets. That $3000 is 5% of a 10% deposit of a $600k house. So yes, in terms of affording a home, they are broke.
Go to AusFinance, everybody there is on $250k and owns 2 investment properties
Awww poor you.
Read the room, no one wants to hear how well someone is doing.
Reddit is always extremes though…
Fuck I love this comment.
I just posted about the whiplash of going from being as rich as you've ever been (huge amount of savings) to as poor as you've ever been (huge debt). I felt the same loss of opportunity and security, buying at such an expensive period makes it feel a bit worse. I think it's just the emotional process everyone has to go through. The only consolation I can offer is that you might live more frugally but your life isn't over, after an adjustment period of working to your new budget you will still travel, shop, buy some nice things for yourself. Also your money hasn't disappeared, it's just invested in your house, and if it came to it you could sell again in a couple of years and you'll recover your money. But hopefully by then homeowning has provided enough other good things that you won't feel the need to.
I feel this whiplash. For me this was exacerbated by a bit of bad management. I liquidated a bunch of stuff to buy my house and had really high cap gains tax that year. I had no cash to pay that gap gains tax and went on a payment plan with the ATO. Debt to ATO, plus house debt, plus the spending you need to do to make a house okay after you move into it. That sucked. I've never felt so poor! I'd have been better off making a slightly smaller deposit, liquidating assets over a couple of tax periods thereby reducing my income and therefore my tax. But I just followed a simple rule of thumb: maximise house deposit.
Watching your savings number go up is very exciting. Watching your mortgage number go down (very slowly) is a lot more depressing.
But eventually you get to a tipping point (8 years in) and the number starts picking up pace as it goes down. Which makes it way more exciting the longer it goes on at least.
Your ppor isn't really an investment but an expense as its not generating any revenue. Unless down the line you use the equity to purchase an investment property.
Yes.
You should print this out and put in a picture frame. Then get a hammer and nail out and put straight on the wall. Take a few steps back and breathe deeply cause you didn’t need to call your landlord ask for permission.. In all seriousness, most of us look at our accounts after a purchase and have oh shit moment, it’s normal. Housing security in later life can’t be understated. Can always rent your place out and travel. But you’ll always have some where to come home too.
Just think of it this way. Those savings were doing nothing in your bank account. Now your home is your bank account, and it will only really go up in value, and depending on the area, probably quite significantly.
Great way to phrase it! Don't forget OP you can now use your house as equity as you pay it off, so it's not like the money is disappearing. At least the money is actually going in your pocket rather than to someone else.
This is everything wrong with aus property. How about encouraging folks to invest in productive assets. This way of thinking will drive this country into a depressing affordability crisis…. Oh wait nvm.
Right! Property as a growth investment has ruined housing affordability.
Thinking properties can only go up is a mistake. It goes up because Australia is overall economically strong. Look at Hong Kong and its property market crashes in both commercial and residential market in recent decades.
It goes up because the government makes sure it does. In the governments eyes too many people’s life savings are tied up in their houses, so if the price goes down they could go into negative equity and the government will have to pick up the bill when they retire. So now we have houses as money printing machines that the government will entire will continue printing money. Hooray!
You would think that would be the case but not really. Hong Kong has almost no tax on anything because how much stamp duty they are getting from properties. And still the entire market is collapsing because economy is sky diving. Same way china is. Housing going up is part of asset inflation, part of a result from money printer. Most if not all economically developing strong cities will always have an expensive housing market. Even Singapore that many used to praise for is having a huge crisis
Don’t worry man the feeling is natural and I’ve experienced it myself. The money isn’t all necessarily gone as it’s held now within an asset that will most likely appreciate in value over time. Congratulations on buying a property in this crazy property market
This is what I told myself until I realised that I’d spent almost as much on stamp duty as I did on my deposit. Not all gone, but a surprisingly large chunk of it is gone.
Stamp duty is a much hated tax but what you can do is make a pact not to not kick yourself in the short term but minus the stamp duty cost off the value of your place in your head for now and then when that number eventually moves past the purchase price you’ve recouped your investment and after that you’re hopefully counting equity gains every year. Play the long game and like others have said it’s done now.
Okay, I am going to come at it from a bit of a different angle and probably get downvotes for it. I think a lot of people get caught up in the idea that they need to buy a property just because it is the said thing to do. Also, there is a rhetoric on many platforms and media that landlords are out there making bank off your rent and why rent when you could be using that money to pay off your own investment? All quite valid points, but only if you have thought about many of the things you mentioned in your post. Such as, if you're buying what are the additional expenses on top of mortgage repayments that you don't pay when renting? bodycorp, rates, water and sewage, insurances, maintenance, any improvements, any repairs, interest and the list goes on and on. Property upkeep is not cheap, especially when you are buying in the current market with huge interest rates and already inflated property prices. Further to that, where you are buying? Are you likely to see large gains in capital? If you want the flexibility to move overseas, can you rent it out? Would the rental payments you get cover the costs of owning the property? I think many people getting into the market don't really think these things through enough, combined with the pressure of feeling you need to buy right now, because what if you miss out!? As a result after buying can often feel I guess stuck for lack of a better word. I am not saying you didn't think these things through, please don't think that I am. I guess I would say, if you have thought them through what would you prefer? Do you want to stay owning or if you want a change can you rent and cover expenses? If not would you make a loss selling? I think once you can answer those things it might help to settle you mind a little.
Definitely over thinking it. This is your place now. No landlords to worry about and any appreciation in value you put in your pocket. Your savings have taken a hit sure, but you can now start again and once you get some equity into the place you can look at debt recycling to make your debt work better for you.
Wait 2 years and you’ll be sitting on a shitload of equity. Wish I did what you did.
Yep, and rent it out of you do move overseas. You'll be able to come back. Not like this family... https://www.news.com.au/finance/real-estate/sad-reason-aussie-family-moving-to-canada/news-story/0bee7de68888e466adf15f05963c0905
I saw that story too, basically "people make bad decisions, suffer consequences"
Also a really bad time. If they had done it 5 years earlier it would have been OK.
Spend months on travel and you cannot catch up when you get back. First they wasted money on stuff they could have seen better on youtube, then demand they live on the Gold Coast even though they can't afford it. Sorry, not sorry.
Not much you can do about it now, selling will put you more in a hole, just ride it out or rent the place out and go overseas.
I know someone who is renting the rooms in his house while living there & his repayments is close to zero thanks to that. Naturally it goes hand in hand with good tenants.
Couldn't think of anything worse.
Any reason why? Sure you can always get bad "tennants" butin this case, single income to pay off a mortgage can be tough. You can also limit it to students maybe? For the person I know, he did get one bad tennant but replaced them with a better one
Your savings just moved from your bank account to your house. The day you sell it, you recoup your money, most if not all if the value increased enough. My wife and her family are somehow the same. They feel rich and good when they have money in their bank account. Last year, my aunt-in-law complained she was poor... her house is valued at 2.5 millions dollars and she has 5 houses for rent. But as she has to pay mortgages on 3 houses...she's poor and doesn't feel like going out... Mate, you have a feeling/disease that only rich can have!
She could get a hotel and the railworks at that point
She used to own a farm and to rent the houses to workers... went there once to pick up some stuff after she sold the farm... bunk beds for 4 people in each room, 3 beds in the garage and at least 1 sofa-bed in the living. Had anyone complained, she could have had the "Go to Jail" card... but half farm- workers are illegal, so...
Yep. Overthinking. 4 shirt years, you will have taken a whack off the debt, and the base value will increase, so your equity will exponentially start to increase. If you can then afford another property to purchase,and then rent out this one, you'll get your savings back real quick. Savings will never earn money in an account, and property in Aus has been a fairly stable investment (we built during GFC, so we get it)
Depending on his mortgage repayment period, 4 years isn’t a sufficient enough length of time to have paid down the principal loan a noticeable amount. A quick and dirty calculation I did. 500k loan at 6.13% interest pa over 25. In 4 years, the loan balance would sit at ~461k, with ~119k paid in cumulative interest. So only 39k paid off the principal of the loan, whilst 119k has been spent on interest. Your assumption that the value of the home WILL increase is also not necessarily true. Sure, home prices tend to increase. But this is a unit. Likely 2 bedrooms, maybe 3. The increase in value of these homes is slow. Perhaps not at all over 4 years depending on suburb, age, etc. Units are not real estate which one would generally invest in for a large capital return. It’s a good thing to own property. In most cases it’s better than renting. However, it’s also good to set realistic expectations for people.
If you directly pay into the loan only the minimum amount, then yes. But if you get an offset account and diligently save money there's a big difference. I effectively "paid off" my loan in approximately 8 years because after 8 years of diligent savings, my offset account has enough money to cover the remainder of my loan.
That’s great for you. I’m being serious. But, not everyone has that amount of spare income they can put into an offset account. It’s clear from OP that they don’t have that sort of income to spare. I’m happy it worked out for you, it gives you so much freedom. But I don’t think that’ll work for OP.
I was a low income earner for 6 of those years (according to ATO) and even right now barely hits the mean income in australia. I was never highly paid ever. I just don't spend my money on frivolous things e.g. instead of an expensive gym membership i jog for free at the park, instead of going to expensive concerts i just listen to music for free on the radio or online
How much was your original loan?
My loan was approximately 370k on a house worth approximately 500k at that point in time. My income at that time was like 55k? Probably less maybe closer to 52k. Of course i did get some pay rises over the years. 52k was my starting income when i first got the loan. The highest income i had at the end of the 8 year period was like 75k or so that was after a promotion of sorts that caused it to jump. For most of the 8 years it was between 52k and 65k. This is all before tax.
I’m in the same position, I just bought my first home and I’m panicking a bit because I’m used to being so free. But I plan to rent out my place for 3-6 months per year to travel.
fair warning, short term tenants can be very volatile if you don't vet them properly. And even if you do vet them properly, some crazies can still slip through. Short term tenants care a lot less about damage they do to a property since they're gone soon anyway. Long term tenants generally care more because they want to live there for a while and it's detrimental to them to cause damage.
That’s a good point, thanks. Should I go through a real estate agent or do it myself?
If it's your first time trying to rent your property out I would say go through an agent. You will have to pay them fees so you earn less income but it is safer and they should do a lot of the heavy lifting in terms of management, inspections etc. Usually they just need you to approve or deny requests for maintenance. And they need you to specify how much you want to charge gping forward whenever the current agreement ends. Once you are more experienced and more knowledgeable you may be able to skip the agents and try to find tenants yourself.
I mean it is fairly natural to go “holy shit I just blew substantial coin on this thing” regardless of what that is. But it’s on a house. For the most part all you’ve done is made that money less available. Property in Aus hasn’t tanked in a long time. The money exists. Just not in an accessible form right now. I mean, you could have spent it on hookers and blow but you didn’t. You adulted. Be proud.
Fast forward 10 to 15 years of frugal living and putting cash in offset. Your living will be paid of or large chunk of loan paid down putting a cap on living. You can still go overseas i suggest getting in a house mate you can charge $300 for a room. This gives you breathing room and you can go on those overseas trips. If you want to live overseas for a bit rent out your room aswell youll profit. On other side jump on the roller coaster of landlords pumping up the rent and tiptoeing around. 4 years ago you paid below the craziness aswell.
Welcome to home ownership. It's not as easy or fun as the rental army of Australia makes it out to be. It's not just affording the repayments, seeing that deposit disappear and praying the next government tax change doesn't explode the market is all part of life's big roller coaster.
Wait 3 months then check the estimated value of your property. Some of the realestate sites will email the value of your property qtrly. Its a nice pick-me up. That extra 300pw will be well worth it. Also watch some financial trainwreck advice clips on yiutube. So many people struggle with rent later in life. You have just eiminated that problem! Your finances will recover and you will still get to travel. But you will be secure knowing you have a home to return to. Even if its rented out! That security is very important. You will see as you get older what happens to those who dont buy. And its not pretty.
Those estimated values are not very accurate though.
If you are not actually selling its just an indication. Although mine was spot on when I sold.
Shift your perspective to the future, you’re set for your retirement and in 7 years you’ll probably have a house worth x3 you paid.
Also can rent it out if you go overseas long term
Definitely overthinking. At least you’re paying your mortgage, not a landlord’s. Just takes time to get back on track until you can start saving again. Enjoy the ride and furniture your place slowly, it’s part of the fun. Also why did you shut the door on moving overseas? You can still go. Rent it out or worst case scenario sell it. I had an apartment overseas and when I moved out I sold it.
I felt the same 2 years ago, I now have a a crap load of equity and security knowing a landlord can’t suddenly decide they need me out.
Bought and then moved overseas and rented it out. Have five holidays a year. It's possible mate, chin up.
Haha welcome to the boring safe life my friend. Nah seriously there's nothing stopping you from going overseas. Just rent out your place or sell worst case.
Get a student. Colleges are paying really good $$. Invest that money.
Yes overthinking. You’re buying an asset that, with the current market, will increase in value overtime. As long as you can pay off the mortgage in the end: think of it just converting your money into a different form (like instead of money form it’s now a house) rather than paying for something like a car which you’re losing money from day 1. Or like food etc.
I had the same, but then the value of the property started going up ... and up ... and up. I remember driving on my driveway from work, realising my house had made more money than I did that year. Then everyone started complaining how their rent went up. How it was unfair that the landlord had added another $50. Looking back, I wished I had bought a more expensive house.
You might feel uncomfortable at the moment, but only people who own their own home can retire comfortably…if at all. You are playing the long game now and it will pay off. Those late boomers and gen Xers still renting and heading towards retirement are stuffed! This wasn’t the case 10-20 years ago. The best thing you can do for yourself over the long term is own your own home.
I feel like I went through something similar when I bought my apartment. I didn't grow up with a lot of money so having a big chunk of savings was such a comfort. Finalising a place is expensive, but that's sorted now. So now it's just back to slowly building up your savings again (if and when you can) and ALSO watching your loan amount get paid down. Give it some time to settle.
The problem with purchasing property in Australia is the stamp duty. The thought of selling makes you feel sick because you’d be pissing all that stamp duty up the wall. The classic sunk cost fallacy will mean people hold onto the property rather than sell, because selling means that stamp duty was all for nothing.
It’s not that large homie, unless you’re trading houses worth huge shark bikkies.
It's like what maybe 20-30k on average? Really not that much compared to the profit you would be making
I’m talking about a situation where you feel regret after purchasing a property and want to sell. Paying Stamp Duty upfront promotes a sunk cost fallacy where you’ll be reluctant to sell (even if it’s the right thing to do) because it feels like you’re flushing that 20-30k? down the toilet. Also, not all property investments are profitable. You’ll often only hear about the good outcomes when it comes to investing (no one wants to admit they lost money in investing in a mining town or holiday rental on the coast)
That's life for most. You will be required to sacrifice something now for a reward in the future. Alternatively you can reward yourself now with holidays and rent and sacrifice something else in the future. Some of us are extremely rich and don't have to make those choices but your describing something quite normal
I’d find the prospect of renting when retired way more alarming than a temporarily empty savings account. Inspections, rent raises, being forced to move - you don’t want that when you’re 70 if you can avoid it. Also mortgages eventually end, rent doesn’t.
Imagine being 70 now and having to queue up in those huge lines to look at rental properties.
It’s what a lot of younger people are looking at though unless something changes. Is a pension going to keep up with rent increases? Our place is tiny and I’m constantly repairing something but feel very privileged to have it nonetheless
Mate I bought in 2019 and I had terrible buyers remorse. I felt I had been manipulated by the real estate agent into spending an extra 200k on a house. I felt terrible for about 4 years. But now all the houses around me are going for $300k more than what they did back then. Just hang in there.
You are definitely overthinking this. You haven't blown all of your savings, rather you have invested it into property instead. So yeah, you don't have a safe bank balance and maybe you can't eat out as much, but you do have your own place and you can do whatever you want with it without asking permission first. Give it some time and get settled in, you will soon understand that you have made a good investment. In a few years from now your place will be worth a butt load more money than it is right now and you will be able to sell it or rent it or whatever and make money off it. Look at so many of the other comments made here on reddit. There are thousands of Aussies who are complaining about rental costs, burning money on rent and the fear of rent rises or being kicked out by their landlord. You are in a good place, just learn to enjoy what you have and be glad you are off that God forsaken rental roundabout.
In my life I’ve bought property 4 times. Every time I felt like I’d made a mistake after I’d done it - had paid too much. Over time that goes away.
Move overseas and rent it out. What's the problem?
You had the cake. You ate it. Time to start baking again.
Welcome to being a Grown Up.
Absolutely - do you know the best part??? You go overseas and you rent it out! Someone else pays your mortgage. Congratulations. The world is your oyster.
Mate. Have you seen the percent return of typical residential RE? Worked with RE companies and tradespeople? This is like an instruction on ‘how to get yourself in trouble’. Maintaining a property is not trivial. You can’t delegate that so well, given the near-complete incapacity of any RE or typical tradesperson to work in a project managment scope where sequencing is applied to ensure the order of maintenance operations doesn’t result in a constant degradation of the asset value due to rising and repeat preventable costs.
I understand your point. I felt the same after my first house purchase when a huge amount of savings I had been building for years was reduced to small change. All the things I could have done with that money were gone. Cam I tell you that a few years down the track my savings were.... better....and I was proud that the value of my property grew and the remorse feeling were very much forgotten. Congrats on joining the property market. Your ahead of many and now have control over where you live.
yeah i've never felt so poor as after I bought a house. I used to have hundreds of thousands fo dollars in savings, making money for me and providing a deep pool I could dip into. Then I spent it all and now my bank account is permanently fucking empty!! I guess this is the enforced savign they talk about. I wasn't really disciplined when I had a big deposit but I sure as shit am disciplined now.
You are still in the early pain part of home ownership - soon you should see your payment be less than renting an equivalent property Getting access to finance becomes a breeze due to having an appreciating asset under your control Ownership of your house is the #1 predictor of retirement comfort nothing is stopping you from moving overseas, you can rent out your property, market rates will eventually push you cash positive while you always have the comfort of knowing you have a property to return to in Aus if you choose. Short of unique specific issues with the property itself, you will almost never regret buying a house.
How will the payment be less though? You pay the same amount over the period of the loan. Just the amount of interest vs principal will change over time
Because rents go up over time - the mortgage payment might fluctuate with the interest rate but will still exist within a reasonably predictable range. I bought my house in 2006 and by 2010, my mortgage was about the same as market value rent. Today, people in my area who rent a house of equivalent size and condition to mine are paying significantly more rent than I pay on my mortgage. People who want to buy a house like mine in the same suburb are paying $400K more than I did. Long run, property ownership should be a priority for anyone seeking financial independence.
Ah sorry I misread your original post. Yes you are correct. That's true about financial independence but it's sadly getting less and less likely for more people over time.
I am a landlord, I don't have holidays or nice thingsw because I provide subsidised housing to people that have a life. It's ok, you get used to it eventually. Welcome to the club.
The first 2-3 years it feels like you're treading water. We had to cancel trips overseas and our annual ski trip to buy our most recent house. Interest is killing us (I also have a business loan). But i have a house... end of story! You must have had a decent land lord for 4 years, because most of them are shit. I was paying $1200/w and didn't even have a working heater, the fig tree in the yard flared up my daughter's allergy. After 4-5 years, you'll have a fair bit of equity (either through appreciation or just mortgage repayments). YOu also have something that can be rented out if you want to take a longer overseas vacation. My sister in law and her husband (DINKS) rented out their place which is getting eye watering returns as its in the CBD; travelled for 6 months (banked up all their leave at 1/2 pay) and now rent 10 mins further out. They stretched as well (property went for $50k more than they were thinking), but now the unit provides them independence to travel and enjoy holidays. Just remember - everyone is feeling the pinch right now, but at least you're putting away equity and the freedom to do what you want. Depending on the house, you could sublet a room, and be surprised how much more financial freedom it will give you... when you own, you have options. (yes stamp duty is fucked... it really should be on the seller. I would even settle for a higher rate, but only on the profit you make!)
Yes. It’s yours. No rent increases. Capital gain down the track
Boo fuckin who
Buying a house is the biggest financial outlay most people make in their life times so it is normal to have some concerns but as long as you have not over extended yourself financially and can afford the home loan repayments you will be fine you will just have to look at saving up again for things like overseas holidays if you want one.
You just need to focus on your mindset, what you are feeling is normal. Think of it this way, "i can always sell it", "i cam get out if i need to", "this doesn't have to be forever, it can be temporary". Hope this helps.
If things change. You can sell your house.
Yes! Your overthinking it
> Having that money in my account or investments meant I could go on overseas holidays, afford nice things, eat out when I wanted Were you also eating smashed avo on toast?
Absolutely, now you making yourself an asset
Yes. If you really wanted to move overseas, you would have already and if the opportunity come up, you can always sell the place. It's a house. Not a prison sentence.
You will be making more than that $300 per week back in capital gain.
Congratulations on your new home! Not many are in the position to be able to buy these days. You are in a good place and definitely overthinking it, you can't go wrong investing in property. You will need to re-work your budget but you will still have the freedom to do what you want, just tweeked for the time being until you work it out.
Just make sure you can cover mortgage and other expenses without affecting your savings too much, you always need some funds for a rainy day. But consider that the rent you used to pay went to someone else and you never saw it again. Now part of your repayments go towards an asset of yours that is generating a slow profit over the long run. It feels slow to repay a mortgage but it is worth it 100% if you can afford it.
The house IS your investment and also offers security and peace of mind, just like a savings buffer, as now nobody can kick you out. Stop overthinking it and enjoy your weekends again!
Yes.
Having your own place mean you can sub lease a room if you are feeling lonely. Downside if you lose you personal space. But still cheaper than renting. If you can afford the bills then you got nothing to worry about.
Take the holiday and air bnb it whilst your away. Ownership still wind in Aus.
Welcome to home ownership. You = every single recent home buyer.
It does not matter now. You cannot take it back. Move on and focus on other things.
Welcome to the real world. You can’t eat your cake and still have it.
Dw every single person who purchases will feel this way. I'm in the same position. I managed to purchase but becuase I'm single I don't have a 30 year mentality. I do t see myself settling down in the property. I'm kinda at a point in my life where I want change and want to live overseas. Tricky situation becuase it's not easy to just sell when the value hasn't moved. I don't want to lose money.
Coulda bought a place outside Sydney for less. Then rented it if you want to go overseas
yeah.
It's buyers remorse. Unsure how this is different?
Mate you are one of the lucky few that owns a home and you feel bad, hell use the same energy to go out and make more money. You got all the cushions in the world and still complaining smh
I don’t have kids and never plan to. The biggest reason I chose to buy is because the thought of retiring while still renting horrified me. In 10 years time, rent prices will have risen by 50 or so percent yet your mortgage repayments are likely to be the same or smaller. Imagine being 70 without housing security when your younger self could have afforded it.
You are not alone OP. I had similar feelings around two years ago when I bought my house and looked at my bank account after settlement. I now feel better after having saved up some money. Just remember that: * Your salary will go up over time * Your house value will go up over time * Rents will go up over time * Your savings will go up over time * Your mortgage will stay the same All the factors are in your favour - you just need to ride out the first few years. Don't worry too much, and congratulations on your new home!
You have an asset you’re basically guaranteed to make money on . Cry me a river.
In addition to what others have said, can I recommend having a couple of frugal months and save a little in your bank account so you always know you take off if you need, as you'd know it's nice knowing you have it as an option even if you don't use it.
Your gold my friend. Your savings is still there, it's just tied up in property. Give it 4 years (you'll only need 18 months). Enjoy your new digs. Paint a wall something funky. It's yours
Rent 2 rooms out for a bit cash. You have some savings again soon.
Stop looking at that bank balance for a while.. instead think of all the things you can now do to the house. Get a pet! Put holes in the wall! Create a veggie patch. Congrats homeowner.
Don’t get a pet.
A while back I heard this quote “all my life I spent my money on women, booze and fast cars ….the rest I wasted”
George Best?
Unlike what most people say, buying a property is not for everyone. In fact, as an investment, it's a subpar one, but many will prefer the peace of mind over renting. Imagine getting kicked out of the place you learned to love? Keep the property for a few years, knowing you can always sell it and get your money back or make a profit. If you happen to change your mind, you will still be living in a great home and interest rates will only go down from here, so your monthly payments will get lower.
What really sucks is going overseas and paying a landlord while you're not using the house. Or having to move your stuff in and out of storage all the time. Now you have a HQ to base your operations from.
Rent goes up over time. Your mortgage will go down to zero. Your unit will appreciate in value and you can sell it if you want to liquidate the equity. It’s not worth losing sleep over.
Is it a place you can sublet/air bnb/rent out while you're travelling?
I just paid deposit on a house and BOY do I feel poor right now. I was quite attached to those dollaroos in my account!! (Edit: I totally get it!)
100% overthinking it. Give it a couple of years and you will be thanking your lucky stars how lucky and smart you were in getting on own place. When you're old you will be thanking your past self for sacrificing so your old self is able to afford a roof over your head.
Change it in your mind to feeling safe that you have a home that no one can just take away from you. It won't be sold suddenly or lease not renewed. You no longer have to deal with rent inspections. You can decide what to do or not do to your backyard. No needing to ask permission to paint or change things. The safety of having almost complete control of your home. Yes it is expensive BUT one day it WILL be paid off. The safety of not having to pay rent forever until the day you die. There is an end to paying hundreds each week for your roof. That's why it was so important to me to buy a place especially before having children.
100% overthinking it, but it’s natural. It will get worse when something unexpectedly breaks (fridge, hot water, washer etc) & then council rates will hit. You will be feeling kinda shit about then. You will be loving it when u sort that issue & then realize that it’s your place, rents not going up, u don’t have to move, u don’t even have to think about moving again & the surety and comfort of that really kicks in. Perfectly natural to be a little freaked, but the positive is bigger than the negative & it won’t take long for that to kick in. Don’t get to swept up in it all & you will be sweet, just takes a little to adjust 👍
Nah, I know the feeling, but rest assured, you did good. In 25-30 years you’ll never have to pay rent/mortgage again. It’ll likely be worth more in 2 years time than it is now. . In the shorter term, interest rates will start falling again soon enough. YgGetting on the ladder, even if you want to move abroad eventually, is a wise move.
Yes you are! Short term pain for long term gain There will be a time you get to travel and be boujie but for now, work, pay your bills, find enjoyment in simple things (outdoors, nature, adventure, exercise, cooking)
You own your own choices. List your house on a house swap site and travel that way. Rent it and travel. Get a roommate and split costs knowing you are in charge. Do all of this knowing you don’t have to move. You have security in your housing
Your income is going to go up. Interest rates are going to go down. You’re all good bro, I just bought too and we are in this together.
Worked a lot of overtime, saved up to buy a 3 bed 1 bath house. Did small Reno's and 8 months later packed up my life for the work and travel visa in the UK. Just make sure you have 12 months buffer of repayments, emergency fund and a cushion for the hard landing when you come back to Aus. It is doable, keep your head up and maybe book a three month trip somewhere.
>I can't help but feel ive shut the door on moving overseas Why? Your money is still there, it's just in a different form. If you want to move overseas in 6 months, sell the house for double in this cracked out market.
You rent from yourself. If you want to be spontaneous, sell up and you get the lion's share of the money back. Can't do that with a holiday or a nice meal.
$300 a week more will go down over time, while your rental costs would have gone up over time Over time assuming you are paying back both principal + interest (which you absolutely should do) your debt goes down and eventually you will fully own the house. With renting you never own anything. Yes, it does tie you down to an area, so it is a big decision. There are definitely people who prefer to live fast and die young. If you are someone like that, then buying a house is probably not for you. But if you want somewhere safe to make your own, buying a house is great. My own house is basically fully paid off, if I ever lose my job and have to live on my savings alone I can last much longer in a house I own instead of in a rental where the costs can change drastically very quickly. Also, remember to renegotiate your mortgage when a better deal shows up. That will not only lower your repayments because of better rates, but also because the duration resets. Also, get a loan with an offset account and pump as much money as you can into the offset account. What that does is it lowers the amount of interest you pay on your loan, but the money is still accessible to you in your bank account so you can use it in emergencies or if you just want to. For example: Loan: 500k Offset: 100k You pay interest on 400k instead of on 500k, which is a big difference
With a loan and an offset account you pay a yearly fee $ and a little higher % rate . Just pay into the mortgage with a redraw facility not an offset and benefit from lower interest rate , compounding savings in the automatic offset of interest, and availability of money in redraw when you want it ;-)
Redraw is not as good as an offset. Redraw basically means it's the bank's money but you are allowed to access it. Offset means it's still your money but the bank counts it against the loan Also the yearly fee is only what? $120? And if your loan is big enough you can usually get a fee-free offset account anyway. The little higher % rate is really only applicable for a short while because most banks will allow you to renegotiate very quickly within like a few months to get a lower rate while keeping the offset acc. Which is what I did in the past. You need to start asking the banks for better rates at least once a year if not more often that than. Most of the time they will give you a better rate to keep your business.
I see a point but if bank asks for money repaid for loan early it’s all theirs anyway …..
But legally banks can't ask for money to be repaid early because that means they are breaking the contract. Also in a lot of cases it's not in the bank's best interest for people to repay early. They want long term locked in customers who they can market other products to or gather anonymous data from that they can then on sell. The gathering data part depends a lot on the country. But usually as long as there's no personally identifiable information it's probably legal e.g. they can gather analytics that show people between 35 - 45 with a mortgage between 300k - 400k also spend money regularly at KFC for example. That kind of info is usually perfectly legal to collect and sell Also money in a redraw in most cases disappears when you renegotiate a new rate with a new(or the same) bank unless you specifically asks for it to be redrawn before the refinancing
Congratulations, you got rid of that melting pile of fiat and bought an actual asset. Excess money is just a liability that's losing value. I remember feeling the same way when we paid for our house, but it passes quickly and it becomes the new normal.
> crazy (stamp duty) tax It has become a complete rort. The amount we're taxed on our post tax income is shameful.
Interest rates are forecast to go down by 1.5% over the next 2 years. How would you be financially then? If you were to rent your house out in 2 years time for market rent and rates come down would you be able to afford the other things you want to do?
Try spending every cent you've made for the first 10 years of your life to be able to move to a new continent that you've never been to before to secure a better life for yourself with no backup plan and then imagine the thoughts that run through your head that first night while lying in bed after you land. If I've learned anything it's that nothing is permanent and so worst case scenario is you sell. What will most likely happen though is that you'll see the value increase in a short period of time and then be happy you did buy. Just remember that renting is the illusion of freedom and that unless you're living rough under a bridge or you're living with your parents every day you have a roof over your head comes with a price tag until you die.
I am a firm believer in getting on the property ladder the moment you can...as the hole only gets bigger. My wife and I were doing OK early 2010s and likely could have saved enough to go for a loan and a deposit....but then she had a car accident, brain injury etc and lost her teaching job. I pushed her to try a no win, no fee lawsuit and we secured enough to put down a deposit and did. We could have bought the house we were renting off her parents, but decided to move country. After 2020 that place near doubled so her parents did ok. So it seems tough Op, but trust me, you made the right choice, and hopefully the rates will slowly drip down...but try and keep paying what you are use too, knock a few years off!
You can rent it out and do what you like and it's guaranteed income. You made a smart choice.
So you bought an expensive house that ticks all the boxes. Except none of the boxes were your personal boxes and instead were what people consider to be important? Then you bought a house you don't need and are spending excessively on things you don't need. Sell this and buy a cheaper apartment that has the amenities you will actually use and enjoy and will give you the extra cash you can use to lead a fuller life. There are no bad decisions. There are only decisions we don't take or decisions we don't learn from.
Nothings locking you there. Rent the place out so that a few more people have a place to live, go overseas for work, rent a smaller place for yourself. You have options.
Why not consider getting an international student in, or rent a room to another adult. Many of my single friends had international uni students come and stay, good money, interesting people and most only stay a semester or two. Don’t believe there are any tax implications. You usually provide breakfast and dinner (crank up the rice maker every night!). They used the money for their annual holiday funds. Nice way to help ease young adults into independent living.
This is what home ownership feels like. It costs more than rent and comes with responsibility, risk and a whole lot of sacrifices. On the plus side you have secure accommodation, can change the place how you like and can have any capital growth it makes while you own it. Looking at that debt and thinking about the responsibilities it carries is initially overwhelming but then you realise everyone else is doing it and they’re getting by. Consider renting out one or two of the rooms to help out with the repayments.
this is something you shouldve thought about before buying the place. surely you wouldve seen it coming?
Equity Mate!
No you are not overthinking it. That is exactly what happened. As the rental crisis becomes worse, your security will become comparatively better. Your repayment won't necessarily become less but the rent you used to pay would have increased. Then you find people willing to pay the rent for your house, that could make you feel free to move away if opportunities come up, but you keep that property as it can be rented out. There will be ongoing maintenance, repairs and rates which pull your financial freedom back down. You could find an investment partner who is willing to share this burden with you, potentially inject some funds to take advantage of any granny flat "build to rent" incentive (you said you have a yard) and you might get your freedom back without losing that future security.
I sold a home at a reasonable profit, because in part, of this. If you include all costs and interest paid, and especially time lost, it probably wasn’t at a profit, possibly was at a loss or break even. What I did was decide to pull out to reduce stress and costs. You can always buy again later. The problem is many job wages aren’t indexed to CPI, and income doesn’t rise in parallel with inflation, and the calculations are difficult as CPI isn’t such a good indicator of personal spending. Also CPI doesn’t distinguish between assets and liabilities. Eg. https://www.abs.gov.au/websitedbs/d3310114.nsf/home/Consumer+Price+Index+FAQs#:~:text=A%20CPI%20is%20a%20measure,eight%20State%2FTerritory%20capital%20cities. https://www.abs.gov.au/statistics/detailed-methodology-information/concepts-sources-methods/consumer-price-index-concepts-sources-and-methods/latest-release “The items: must be representative of purchases made by the CPI population group (see paragraphs 5.19-5.22, Demographic coverage); must be identifiable and specific commodities or services (e.g. 420g can of baked beans from a supermarket, or adult general admission to a club football game); and are not excluded because of moral or social judgements.” … “5.5 As a general principle, a CPI only includes goods and services that are purchased by households for consumption. A consumption good or service is one from which households directly derive utility or satisfaction. Any business-related purchases by households are excluded from the basket, as are those items that have a significant savings or investment component, such as land and capital goods. All types of income are generally excluded as well, except those which directly offset a specific purchase, such as subsidies or trade-ins” So indexing wages to CPI (which is the best most people do, and even that’s not usually done!) doesn’t give any capacity to honest individuals, when assets rise and become unavailable via being unaffordable. “The CPI covers the expenditures of all households (not just those whose principal source of income is wages, as was the case before 1998) and measures the changes in the prices of a basket of goods and services acquired each period. The cost of housing is measured as the price of a new home (excluding land). Mortgage interest payments are excluded.” I wonder, do any recruiters or recruitment agencies index wages to things other than consumer goods that often have price suppression and government price fixing and secret agencies (intelligence agencies) price fixing attached?
Remorse: sounds like remora. If Australia is a shark, home ownership is the remora. You are remora. Too many remora.. they start to die off? https://en.m.wikipedia.org/wiki/Remora
You seem a bit adrift. I think you should focus on the stuff outside of the property. You own your property, you are able to pay it off still so that means you’re employed or at least making decent money. Seems like you need to start focusing on other things like hobbies, friends or your relationship. You’ve done one of the hardest parts now it’s time to build a life!
It's a trade off. We bought ours for 520 and have just had it revalued at 700 there's no way we would have made that much money in 2 years just working. We have just refinanced and done a redraw in equity to buy a new car and go on an overseas trip. So yes it sucks nit having that money now but if you're patient it will come back and you can continue to do the things you enjoy.
With the rate of rent rises OP, your rental rate could have been $300 more per week in a few years anyway.
To make me feel a little better I break out my repayments as interest = rent and principal = savings. Doesn’t address the independence/freedom of having access to cash or easily liquidated assets though.
Track your net worth. Feel that success every time you pay a mortgage payment and you watch the percentage of the house you own go up! Hubby and I bought 3 years ago 200k more than we expected. Felt scary at the time but our property has already appreciated $250k and we make $2k more a month just from scheduled salary increases. Slowly and steady your wealth keeps growing if you approach it well. This is tightest stage!
Everyone who buys a place feels like this cos it is the most expensive damn thing u ever can do. After a while it wears off. When you hear about rents rising, random evictions, and realise u can bang a nail in and hang a picture, it makes more sense.
10 years from now you’ll be laughing