renth

HOW TO SAVE YOUR HOME
A fight worth fighting.

The word 'mortgage' is French in origin. It means to make a pledge upon which your life depends - or, literally, an agreement until death.

In today's debt heavy world a mortgage really has one of two meanings. Either you destroy (kill) it or it destroys (kills) you.

Around one million Australians are now suffering the most talked-about 'material disease' of today - mortgage stress. The symptom of mortgage stress is a mortgage payment which is more than thirty per cent of your net income.

http://www.jenman.com.au/news_article.php?id=234

Trixy

Suggestion 8

Don't imagine paying the mortgage off. Accept that when you die you will owe almost all that you originally borrowed and everything else you have on tic. If you don't have children this option is even more attractive. Leave the big stinky bill for the State to tidy up, the State didn't help with your pension losses and was happy to set its RBA dog on you when you were alive so between the State and your friendly bank, they can sort your failings out. Don't be mean-spirited though, make sure you bequeath your bank your plasma TV and boat as a wee thank you for their kindness over the years.

Tell all your friends, we want a whole generation with this mind set!

MartinH

Well that's fine if you have enough earnings or savings to keep servicing the debt well into retirement - but personally I look forward to the day when I am not pouring money down the drain on interest payments.

steve99

So less than 5%, I thought the number would be higher than that.

geordie downunder

Ah but ,that is 5% of the whole population.If one third of the pop are buying then it is 1/7 th,approx 15%.Just fancied being pedantic.

The 30% quoted always seems so silly to me.Working on average wages if you're paying 30% of your income for a roof over your head ,fair enough.

Clocking up the hours in a resource job picking up 1500 to 2k a week it is a bit difficult to see how they could be under stress paying out 30% of income for rent or mortgage.

A young lad on the radio on monday was asked about mortgage stress,said he was working on a minesite and struggling to pay his m/gage,might have to sell the house at a 10 or 20k loss.Owned the house for 6 months or so and bought it for 400k.

Then he said it was a struggle because of all the bills that go along with the house,the mortgage wasn't that bad but his $1000 phone bill and things like that made it hard.

Lies,damn lies and statistics I suppose.

Hutch

Mortgage stress eh? My mortgage repayments have been more than 30% of my income ever since I took my first step on the housing ladder. Dunno what all the bloody fuss is about...

geordie downunder

Compounding is the glaring hole in that strategy.Say the house is 500k now,puts in very low growth ,and doubles in price in 15 year periods.In 30 years it is worth $2 million.

Compound the other side of the equation,if 500k is 5x average annual household income ,and income keeps up with house price growth.Then in 30 yrs the big monthly payments now,look like nothing .Average household income will be 400K per year.

Wendy

Me neither. You have to budget to your means.

I see a mortgage as a neccesary evil which enables you to buy a home, things like designer clothes, boats and gadgets are a luxury which I don't buy unless I have the spare cash. A home is a neccessity and is worth a lot more than any material possesion. We currently pay about 42% of our income to a mortgage, but we don't struggle because I think having a roof over our heads is a lot more important than having the latest plasma TV or whatever.

I'm not saying there is anything wrong with having these things, just that it isn't a necessary expense unless you have the means and the budget to buy them.

I don't have mortgage stress, and if the rates went up to the historic 17% again, I would still be able to pay the mortgage.

tazkenny

There's a laugh, getting a house for 500K. Try double that. 10x a GOOD income, now who is going to give you a mortgage for that, and even if they did you couldn't afford the repayments.

Hutch

Might be if you live in Sydney - or one of the other large cities. $500k would buy you a four bedroom luxury on 1000sqm with an inground pool around here. $300k gets you a modern three bed on 700sqm. And that's within a 15 minute drive of the large town of Nowra, 45 minutes of the city of Wollongong and 90 minutes of Sydney. If you live in the city -expect to pay city prices, but don't assume everyone's done the same.

geordie downunder

Plenty of houses in Perth and Adelaide for under 500k.Median house price in Perth is around 465k,that means an equal number of houses were sold above that price ,as were sold below that price.

I can guarantee you there are houses in Sydney for well under $1 million.

Wouldn't want anything positive on the board would we.

CazYaz

is mortgage stress 30% gross (before tax) or nett (after tax)

Vash the Stampede

Jenman is a legend, I love his stuff.
So true!