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BubS
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NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 12:27 pm

FH and I will be buying our first home together in the next 6 months and he thinks I'm being a little tight about what we can afford to borrow ... We currently have no debts but are saving madly for our wedding and of course a house deposit.


What percentage of your total net income goes onto your mortgage each week/month?


None of our friends have bought yet and we don't really know how much is reasonable/average :?
 
Darens Girl

Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 12:34 pm

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Last edited by Darens Girl on Sat Feb 05, 2011 12:57 am, edited 1 time in total.
 
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BubS
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 12:43 pm

Thanks mrsko :)

I had worked out that about 20% of our total net income was comfortable for us, which would allow for such things as you mentioned, not having to alter our lifestyle, and including taking time off to have children.

Please don't feel you all have to say the dollar amount of what you're paying, im more interested in how much that is out of what you bring in each week, hope that makes sense :)

Would I be more realistic in expecting to spend half of what we earn on a mortgage?
 
Darens Girl

Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 12:47 pm

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Last edited by Darens Girl on Sat Feb 05, 2011 12:57 am, edited 1 time in total.
 
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Allicat9
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 12:54 pm

We pay approximately 40% of our net income (inc rental income) for our 2 mortgages.

When you are first starting out - I wouldn't go higher than 30% and ensure that you do not borrow more that 80% of the property value.

ETA: Annnnd I thought I would copy and past my other post because it has some good tips:
We bought our first house 5 years ago tomorrow for $258,000 with a loan of $206,400 and the required repayments were around $1400, but we used to put in as much as possible.

In June last year, we refinanced that loan so we now have 2 houses with a combined value of $785,500 and a combined loan of $628,400. Our repayments are about $3700 per month after the recent rate rise, but we get about $1500 in rent.

My tips:
- Only borrow 80% of the purchase price if possible. This will not only save you about $6,000 in mortgage insuranrce, it will also mean that at the very least you have 20% equity in your property, so, should the sh!t hit the fan and you have to sell, you will still be able to pay out your loan and agents fees. So for a $300,000 property you will need to have saved a $60,000 deposit (20%). It will also enable you build equity in you home quicker, meaning you can get investment properties (but I won't go into that!)

- Speak to a mortgage broker (like Aussie etc.) you don't have to pay them a cent and they do all the work for you They will also be able to tell you how much you can borrow. But NEVER borrow as much as they tell you - just because you CAN, doesn't mean you SHOULD!

- Get a loan that has a free re-draw facility with no minimum amount - then put as much money as you can into the loan!! Treat it as a savings account. You'll be offsetting the interest on your loan (approx 6.5%) rather than earning a misely interest of about 4% that the Government take their tax out off too!

- Pay off extra! On a loan of $240,000 (for a $300,000 home) at 6.5% with a 30 year term, if you pay just $100 per month extra (which is just $25 a week, or a large cuppa each workday).... You will save: 4 years and 10 months of the loan and a whopping $58,352.47!

- Pay weekly! Or at least fortnightly. With the loan same as above, paying monthly, over the life of the loan you will pay $318,861 just in interest. Without any extra payments if you change your payments to fortnightly the interest goes down to $245,734 and if you pay weekly, $245,579. This is a saving of $73,282 without any extra payments!!!!




Ok, I stop going on now... I get a bit excited....
Last edited by Allicat9 on Wed Jan 12, 2011 2:10 pm, edited 1 time in total.
 
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BubS
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 1:08 pm

Goodness I would never commit to 50%, that is wayyyyyyy too much more than the 20% I want :)
 
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StephMT
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 1:57 pm

 
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BubS
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 2:02 pm

Thankyou Steph.

As I mentioned again above, the dollar amount is irrelevant for what I am asking unless I know what percentage of your total income that equals.

nevermind!!!!
 
tarwon
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 4:17 pm

At the moment it's about 25% of our income, but that's just on our land and I'm not working full time until Feb 1st. Once our house is completely built, it will be about 50% of our net income on the mortgage. I recommend having back up money in a savings account or mortgage offset account. We plan to have $15,000 cash at all times in case one of us gets sick or loses our job.
 
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Re: NWR- How much does your mortgage cost you?

Wed Jan 12, 2011 5:01 pm

At the moment our mortgages chew up approx 35% of our net income. We have two mortgages, one on a block of land and one for the house we live in. We WOULD be doing it easy if FH wasn't having to pay child support (for a child we have 50% of the time, whose mother earns a very good CASH income. But that's another story!!) FH's child support payments chew up another 21% of his income.

If it weren't for his child support payments, the mortgage being 35% would be quite comfortable. We plan to sell the house in a few years and build on the block. Our mortgage will probably still be around 35%. I wouldn't want to borrow more than that.
 
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Re: NWR- How much does your mortgage cost you?

Tue Jan 18, 2011 10:25 am

mrsko wrote:
I think there is an existing thread floating around somewhere... Planning to have a mortgage is not so much about how much you can afford weekly or monthly but it's more about taking into account for other factors that may reduce your income. Worse case senarios could be one person may lose a job due to redundancy/illness, having a family, etc.

Our mortgage is costing us around $2,300 a month (interest only loan) for a $352k loan. DH was made redundant 9 months ago & luckily we have some funds in our offset account to help get us through. As to having a family, we've put that in the back berner for another 4 years.


We have a similar scenario in that we have the offset account to reduce the amount we pay and as back up in case of unforseeable circumstances. My whole monthly wage covers our mortgage on a $350k loan.
 
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Re: NWR- How much does your mortgage cost you?

Tue Jan 18, 2011 11:27 am

the rule of thumb that I've heard is to spend a third of your income on your mortgage.

I just worked ours out as I did not actually know. It turns out that we put a third of our net income into our offset from which the loan comes out of. that money covers all bills, mortgage and I upped our repayments by an extra $100 per week (so I was very pleased to read Ali's figures of what I will ultimately save)
 
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Re: NWR- How much does your mortgage cost you?

Wed Jan 19, 2011 2:13 pm

To stem off from this topic only slightly, can I ask how everyone went saving their home deposit, and how long it took everyone to do so?
 
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Re: NWR- How much does your mortgage cost you?

Wed Jan 19, 2011 2:50 pm

We were lucky in that we got the first home owners grant and on top of that we only had to show the bank we had sufficient funds in our account. We had some assistance from a friend who transferred the funds into our account for a 48 hour period. We printed the statement with the balance and gave that to the bank which was sufficient. Not sure if they still allow that these days.

Our deposit for our second house we used the money from the profit we made when we sold the first house - $50k over 2 years.
 
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Re: NWR- How much does your mortgage cost you?

Fri Mar 11, 2011 2:18 pm

We are looking to buy at the start of next year. The min payment will be 40% of our joint after-tax income. Is that a good amount? We have to go for mortgage insurance though. Our rent currently is pretty expensive and if we wait to have 20% saved, we'll be throwing alot of money away in rent which seems silly to me. I'd rather start paying off our mortgage asap.
 
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Re: NWR- How much does your mortgage cost you?

Mon Mar 14, 2011 1:27 pm

I got my mortgage on my own, using the first home owners grant. Since then, rates have gone up heaps, so currently it's at 60% of my income :?

I recently let DP start contributing (I felt bad about him paying any of *my* debt so put off his insistance to pay for a long time) so now it's much more comfortable...

About 20 years ago, rates got to 17%.... can u imagine trying to service a loan with that sort of interest now??
 
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Re: NWR- How much does your mortgage cost you?

Mon Mar 14, 2011 9:01 pm

Ours is around 35% of our gross income. We rent our property out though as we moved states and only make back about half in rental income as compared to what we pay on our mortgage.

As far as our deposit goes, his parents gave us the deposit as a gift and we also had the first home owners grant.
 
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Re: NWR- How much does your mortgage cost you?

Fri Mar 18, 2011 11:46 am

Ours is 15% but FH makes really good money. We saved for our deposit 24,000 in 6 months plus the 14k first home buyers. By the way you need to show that you have the ability to save these days and can't just show them an account balance.
 
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Re: NWR- How much does your mortgage cost you?

Thu Jul 28, 2011 4:16 pm

Ours is around 30% of our net income which I think is ok. We're comfortably paying more off it at this stage (into an offset account) but when we have kids we need to have money saved so I can be off work for a while. Paid maternity leave is a great help, but it's less than half what I take home now so we need to have plenty of savings there to make up the defecit.
 
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Re: NWR- How much does your mortgage cost you?

Fri Jul 29, 2011 12:28 pm

good question i had never thought of this! Just looked at it & our repayment is 30% of our net income. We pay 50% though as we can afford to.

we were very lucky & got 21k off the first home owners building grant & sold FHs car & saved really hard for about a year we ended up with over 50k not that it matters now our account has a very big debt!!
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