Quote:
Originally Posted by Dealy
My brother in-law when he first married wanted straight away what his parents had worked 30 years to get.
He went out and bought a brand new house, furnished it with brand new furniture, bought a brand new car, was not kept on at the end of his apprenticeship, and lost everything.
That was 20 years ago, he's only recently bought his second house with a bit more wisdom and common sense.
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I had a discussion with a 30 year old bloke couple of weeks ago who bought a house in Prestons, western Sydney. So a nice $500k loan. He probably paid $100k so far off the principal which is not bad. Then he went to buy an investment property in Oran park for $870k. Went half way with a "mate". Now that's a $935k loan at 4% which is rock bottom rate. He doesn't seem overly worried. He thinks he owns a lot of asset. People don't realise they live in the bank's house until they can't afford to pay. Little does he know (or realise) that if the interest rates rise or his properties valuations drop, which both may very likely happen, he'll be left in the street with nothing still owing a pretty hefty amount of cash. When I pointed it out he said: "yeah, but how do you get ahead in this game then?". Well... not like this.
I borrowed $100k initially, had $40k variable at 7% and $60k fixed at 9.3%. Back then, the bank also capped maximum yearly repayment to $5k. I didn't have much room to move outside of bills and food.