Hi.
My husband and I are trying to buy our first home. We never thought it would happen. My husband is on a middle income bracket
and I'm a low income. We have 5 kids together. The loan we are looking at getting will give us a small house, huge yard. Its an extra $70 a week then we are currently paying on rent. I'm just really second guessing at the moment to whether we can afford it. At the moment we live very comfortable and are able to save money each week. Im worried that if we get a home loan we won't be able to afford it or won't live as comfortable and wont be able to save or go away anywhere. I'm tossing up what to do. I dont want to struggle. I want my kids to still be able to play sport etc and not miss out on doing stuff because we wanted a house. Has anyone been in this position?. How did you know what to do? Have you got any advice for us please. We will be getting a great deal one that we may never get again but I'm torn. I dont want to fail and go broke
mortgage v renting
mortgage v renting
Posted in:
Money
4 Replies
I'll say one thing only: interest rates are ridiculously low at the moment and while many economists are predicting that they will remain low for at least 2-3 years, the fact is that an interest rate rise of even 0.25% will add $20-$50 per week onto your payment. Can you afford for this to happen? Sure, you might be in a different position in even a couple of years (earning more maybe) but what if you're not? Work out what a rise of 1-3% will add to your repayments, as this is likely what will happen in the next 5 or so years.
Agree with above poster. Interest rates are ridiculously low and you need to think about whether you could afford the repayments if interest rates went up 1-2%. I think use some of banks loan calculators and see what a change in interest rates could do your repayments and see whether it's doable.
Can I suggest if you do go ahead, make sure you have a savings acount for emergencies - hot water, washing machine, roller shutter motors breaking, plumbing (tree roots!) etc etc always keep $1-2000 in it for emergencies on top of bills you need to pay...
Personally, I think buying a home is a great investment - and that's coming from someone who bought at the wrong time (property prices here were at an all time high - nevermind it is what it is). Having kids it's importanat for me to have something to leave for them when me and my husband pass (we're only on out early 30's but this was a factor in our decision. Even if we sold once we retired to travel or whatever, having the ability to help our kids with their own house deposit would be womderful. Renting is dead money and all you are doing is paying off someone else's mortgage. If you guys are living very comfotably at the moment, what's another $70 /week? Anyone's situation can change and at the end of the day if it changed how would you pay rent? We are in the same boat income wise & do have to go without sometimes, knowing that we have a home we own, that when we are pensioners we won't be scrambling to pay rent and keep food on the table, is totally worth it. Of course interest rates are low, which is why you will find any decent bank will assess your application on a much higher rate than the current one to ensure you can afford the loan when they go up (please check this with the bank you go through if you do end up applying) When you say you don't want your kids to miss out on sport, you won't be able to save or go away anywhere - please explain how you get $70 a week to stretch to cover all that lol! sometimes to get ahead you just have to jump in and hope for the best :) best of luck with your decision x