Home ownership

[WRCVR4]

Ok, all you single income ppl.

How do you do it ?

What % of your monthly pay goes towards the home loan ?

Id like to buy, am on good money, but don't see how you lot do it for 30yrs :shock:

 

[EVO-00X]

You dont :lol: With the rediculous mortgages and interest rates we have you probably could only afford to pay the monthly interest on the loan to maintain a status-quo. Lots of people I know, especially with kids barely make a dent in their home loans because they cant afford to pay more than the interest. Half of my pay goes to my home loan and I have a Mrs and 2 kids so the 'leftover $$' to go toward extra on the loan is minimal :cry: If I were single then that would be a different story, I'd be able to pay more. Our minimum repayment on the home is cheaper than if we didnt own a home and had to pay rent so at least we're good in that repsect. Plus if i were to sell now I'd make nearly double the price of what I got the home for (not that I would sell because big mortgages suck, I've seen what it does to families with each interest rate increase :cry: ).

 

[Gav]

Not that I have done this - but IMHO there are a few ways you could do
this.
Option 1
1) Buy an investment property geared appropriately to your income - you
might need to save a while for a deposit to do this.
2) Live in a rental with much lower rent than what your investment
property is earning.
3) pay as much off your investment loan as you can
4) eventually you will have enough equity in your investment property
to give you a really good deposit on your own place to live in

Or if you're a tradie you could buy renovator's delight type places, do
them up with your own labour and mates rates and then sell at a profit.
Repeat that a few times to get a really big deposit for your own place.

Either way you're using the other person's money to get you up the ladder

 

[DOUGMO]

all i can say is finish your car first

 

[AUSVR4]

all i can say is finish your car first

Car won't earn you money though.

Gav's option is probably the best one. Single income is really going to be hard. The other option is to buy a small one bedroom place to at least get your foot into the market. Then later down the track you can sell up if you go in with a partner and use the equity to make the amount you're loaned less.
Or if you were really game, something from the housing trust (or whatever you call it in Vic. Low income housing) in an area that has potential in the near future. With the goal (when the suburb starts to take off) to eventually knock it down and build something new.

 

[runuts]

First rule, don't buy one house. You will never get ahead, not quickly anyway.

Buy 2. A place to live in, and an investment house in a high growth area. Atm, SE Qld, and WA are probably your best bet. In these areas, they tend to double in value within 5years.
Pay interest only. The ammount you will make from the second home, will pay off your first, if you structure it correctly.
Remember, as everything else increases, so does the rental income, and tax benefits from having the investment property.
The loan structure is the most important aspect. If you get this right, you will get a tax break, and also, everything on the investment house is tax deductible.
The rental income from the investment house, should pretty much cover its interest payments anyway. So you will have a mimimal outlay for it.
In time, hopefully you will either earn more, or spend less. Allowing you to pay more off your primary residence. Therefore reducing the minimum payment each month. In 5-7 years, your investment house has pretty well doubled in value. You could sell it, pay off the majority of your primary residence, or you could borrow against it and purchase another property. All depends on your financial situation at the time. Either way, you'll be alot further ahead now, than you ever were.

Whatever you do, DO NOT GET A PRINCIPLE AND INTEREST LOAN. Its a sure way to ruin your lifestyle, and limit your ability to make any real money.

Think of an interest only loan, as a large credit card. You can either pay the minimum each month, which will stay the same depending on interest rate fluctuations, or you can pay more, and reduce the minimum payment each month. The choice becomes yours.

 

[nvs_evo]

bang on ru nuts thats exactly what im looking at doin next year

 

[matress]

what is a principal and interest loan?

i'm looking to buy within probably the next couple of years but everything is so intimidating at the moment!

i've even considered moving interstate (possibly SE QLD) to get my foot in the door in a cheaper and more developing market than what i'm in currently in melbourne where house prices are going through the roof.

 

[WRCVR4]

Issue is finding property that makes $ from the outset
Then convince the bank to lend you twice as much (you will still have to be able to cover both loans, with your income.)

Feel free to tell me more nvs :wink:

 

[WRCVR4]

what is a principal and interest loan?

A normal home loan, where your repayments are 90% intrest and 10% principal (ie reduce the total about that interest is calculated on next month)

i've even considered moving interstate (possibly SE QLD) to get my foot in the door in a cheaper and more developing market than what i'm in currently in melbourne where house prices are going through the roof.

Yes this is on my cards as well, but i need to stay around large urban centers for work (ie Brisbane / Gold Coast)

 

[nvs_evo]

a friend of mine is a morgage broker for amp i think and basically said what ru nuts said plus theas all sort of tricks to get a decenct outcome on ur investment via tax rebates,my advice would be to get urself a finacial advisor an d start pre-paring for your future now before its too late

 

[WRCVR4]

Once i have more cash / bigger share portfolio, thats what i plan on doing. 2008 is the year of Troy ?

 

[rock_it]

I do mortgages ...

Best way I think, is to get something as an investment property first, negatively gear it (to reduce your tax), pay as much of it off each year, and sell it to make a proffit....

I also have a place for sale in Spencer St, as a rental ... It comes with a tenancy gaurantee, and is for sale below market price... It was my parents that they bought off the plan and can not afford the mortgage on it and still live their retired life...

Hit me up if anyone is interested btw... Else, I will just buy it for myself ...

 

[WRCVR4]

Will it cover the loan payments ? or how much extra to i need to put into it ?
I don't have much of a deposit atm (cannot get FHG)

 

[Gav]

Negative gearaing isn't as attractive now due to the lower tax rates.
Might still be OK, but just not as good as it used to be

The one thing you need to do is make sure you have maximum
depreciation claims - so make sure you buy a place that was built after
1985. Get a good accountant and/or a quantity surveyor to set you up the
best possible depreciation schedule.


I'll give you an example of how it might work WRCVR4 - it's pretty long
so apologies in advance - and I am not an accountant or anything but I
am a thoughtful investor so I think I know a bit about it - and i have no
idea how much you earn or anything so I'll just take a guess - but
suppose you earn $50k gross p/a and you have a deposit of $20k.
Suppose you buy a place for $400k total incl all fees stamp duty etc,
which means you have a loan of $380k. You might be able to get an
interest only loan at, say 8.5%, and say you can rent it for $300 per week
after all agent's fees etc. Also suppose you get depreciation of $10k p/a.

So before you bought this hypothetical place, at July 2008 tax rates and
assuming you have negligible other deductions you gross $50k and you
have to pay $9600 in tax, so your take home is $40400.

After you bought the place ... your gross income is up to $65600 due to
the rent you get. But when you deduct the interest (approx $32k) and the
depreciation of $10k, your taxable income is now down to $23k and you
only have to pay $1200 in tax.

As it is negative geared, and pretty highly with the example i chose, you
will be out of pocket a bit. Basically your interest payable of $32k against
your rent earned of $16k plus your tax saving of $8k means you will be
out of pocket $8k per year. Whether this is a problem for you, only you
will know ... the theory is that the property will increase in value by more
than this so you're actually better off ... let me know if you have any
questions ....

 

[WRCVR4]

Thanks Gav, it all makes sense. For a investment loan, i need 20% deposit +costs don't i ? (think id go some something under 300k for my first)

With a interest only loan, can i make those extra repayments everyone talks about of the principal ?

 

[Gav]

I doubt you would need that much deposit ... depends on the lender ...
they might be playing a bit tighter after all these subprime shenanigans

 

[WRCVR4]

Who do i talk to, about setting up this sort of thing ?

 

[EVO-00X]

RE: Hypothetical example. But say you own the place for three years and get out of pocket $24,000 ($8,000 pa). You sell the property for $30,000 more than what you bought it for 3 years earlier. How much will the Government tax you on your profit, and how much will you be better off?

 

[tharaka]

You can live in a car, you can't drive a house