Fears of housing 'fire sale' as interest-only loans roll into principal plus interest

Quote:

---

Originally Posted by Ean Austral

Herein lies the problem, Want overruling need.

I grew up 6 kids in a 3 bedroom house , my parents did the best they could, but that was all we had. Don't think I had my own room till I was 14 when my elder brother and sisters had left home.

I want a new Range Rover , but I don't really need it as the D3 still has a few miles left in her yet.

Its just the simple way I see things ,a lot wont agree, but if you cant afford it with a comfortable margin built in , then you opt for something else or nothing at all.

Cheers Ean

---

You were luckier than me,i never had my own bedroom.I was one of 4 boys,we only ever had 3 bedroom houses.
I was the eldest and the first to do the bolt.In fact i couldn't wait to get out of the place,but thats another story.....

My parents never gave me a cent,wouldn't even loan me a cent either.i had to get a loan for my first car,all of $1000.

Same here,if we can't afford it,we don't get it.Its also the way i run the business,don't have the money for a new van,well the old one has to do for a bit longer.Same with other gear.

We paid cash for our house,19yrs ago.Sold the last one and added some savings.

i also could by a new RR tomorrow,but why would i waste the money?Massive maintenance costs,and depreciation.
And i don't want one[bighmmm]

We own our commercial investment properties,they are funded by borrowings between our companies,trusts,and SMSF.
No loans to anyone else.

The hard thing is trying to get our sons and their wives/girl friends to think the same.
They are the 'want it now' generation.

Well people who do not borrow and use the financial system to their full advantage are doing themselves a dis-service and restricting their wealth creation potential - the trick is manage it carefully and not commit yourself to more than you can manage - I do accept that many cannot do the latter.

I have always borrowed and always paid back what I owed - I am now retired and earn far more as a self funded retiree than I ever did working. I now own all my assets but I was only able to get them by borrowing - and if I hadn't borrowed I would be a lot poorer now and probably still working.

People need to use other people's money but not to the point of being over committed.

Garry

Quote:

---

Originally Posted by scarry

You were luckier than me,i never had my own bedroom.I was one of 4 boys,we only ever had 3 bedroom houses.
I was the eldest and the first to do the bolt.In fact i couldn't wait to get out of the place,but thats another story.....

My parents never gave me a cent,wouldn't even loan me a cent either.i had to get a loan for my first car,all of $1000.

Same here,if we can't afford it,we don't get it.Its also the way i run the business,don't have the money for a new van,well the old one has to do for a bit longer.Same with other gear.

We paid cash for our house,19yrs ago.Sold the last one and added some savings.

i also could by a new RR tomorrow,but why would i waste the money?Massive maintenance costs,and depreciation.
And i don't want one[bighmmm]

We own our commercial investment properties,they are funded by borrowings between our companies,trusts,and SMSF.
No loans to anyone else.

The hard thing is trying to get our sons and their wives/girl friends to think the same.
They are the 'want it now' generation.

---

its only taken 37 yrs for me to find out there was a benefit to being the second youngest. Sad part - but good part, I got kicked out of school 6 months later and went fishing , so it was only short lived , but from memory it was good to have a room to myself.

thankfully our youngest daughter got rid of her last partner , he was a want it now. At the time he gave up a good apprenticeship because he thought he was worth 6 figures just to turn up in the morning. Sadly my tax is paying for him to sleep all day these days. - we wont go there....

Cheers Ean

Quote:

---

Originally Posted by garrycol

Well people who do not borrow and use the financial system to their full advantage are doing themselves a dis-service and restricting their wealth creation potential - the trick is manage it carefully and not commit yourself to more than you can manage - I do accept that many cannot do the latter.

I have always borrowed and always paid back what I owed - I am now retired and earn far more as a self funded retiree than I ever did working. I now own all my assets but I was only able to get them by borrowing - and if I hadn't borrowed I would be a lot poorer now and probably still working.

People need to use other people's money but not to the point of being over committed.

Garry

---

Many have to borrow,and those that borrow smart will do well,as you said,don't overcommit.

But there are others that haven't needed to borrow and are doing very well.
We borrowed a bit 35yrs ago,but since then have not needed to,and will be self funded.
We could borrow and risk more,have more worries,but why when we don't need to?
Our aim isn't to be the richest in the graveyard.

My BIL is a good example,he is almost 70,earns rent of over 2mil a year.
Never borrowed a cent,hates financial institutions with a passion.
Just very smart over the years with businesses,and money.
No flash car in his garage,but he could certainly afford one.

I doubt there will ever be a housing market crash ...................... Simply because Australia is VERY short on housing. We allow a HUGE amount of immigration each year. All these people need to be housed. Not only that, 40years ago, each house had 5+ people in it ( 2 adults .... 3+ kids). These days a lot of HUGE houses have 1 or 2 poeple in them. Also we have the baby boomer generation retiring. So a large percentage of the population retiring into large empty houses.

While the demand for housing is so overwhelming, I can't see the market crashing. Sure it may "slump".... But how can it crash when so many people need somewhere to live ?

seeya,
shane L.

folling nz's lead and restricting property buying to Australians only will go a long way.

If you are on interest only, refinance now. Your property will automatically be revalued. That should allow you a comfortable redraw facility. Put all of you income, every pay, into the loan account and redraw only what you need to live on. You will save.
Our place is worth 100% more now than when we bought it in 2013,( Not counting what we just spent on the reno, which makes to a further 20% more valuable) so I think we can soak up a correction.
Most off the downturn in Sydney, so far has been in Units. there is a glut and they're still building more.
Then again; If there is a fire sale storm, there will follow a recession and we're all in trouble.

Quote:

---

Originally Posted by cuppabillytea

Most off the downturn in Sydney, so far has been in Units. there is a glut and they're still building more.
Then again; If there is a fire sale storm, there will follow a recession and we're all in trouble.

---

Last I looked, ditto for Melbourne. Mind you, judging from my sisters recent experience, Melbourne flat prices have doubled over the last five years.

Quote:

---

If you are on

interest

only, refinance now. Your property will automatically be revalued. That should allow you a comfortable redraw facility. Put all of you income, every pay, into the loan account and redraw only what you need to live on. You will save.

---

Define "Need", This redraw system is precisely why so many people are going under with their home loans because far too many people confuse their "Needs" with their "Wants".

What is a median interest rate these days, 7%?
How will people (and property) fare if interest rates increase to around the 1980's rate height of +/- 17.5%, which a lot of members here and the wife and I had to endure.

I'm not going to rehash the "How bad we had it" theme but my wife and I certainly thought things through before we purchased anything. We only had one bed in our first, three bedroom house for quite some time and no telly for a couple of years!