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rent and be 'comfy' or buy and be 'stretched'


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Poll: if you are TTC, preggers or have littlies do you or plan to or have you decided to:

if you are TTC, preggers or have littlies do you or plan to or have you decided to:

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#16 CookiesandCream

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Posted 10 May 2006 - 03:31 PM

QUOTE (mrsobey @ May 10 2006, 02:34 PM)
Can any tell me if Sydney's 'boom' has dropped??

It has it's supposed to be at it's lowest now but starting to rise again.

From what I have read the prices are supposed to skyrocket again next year.

But in saying that even though it's at it's lowest it's still extremly expensive.


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#17 ~Ally~

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Posted 10 May 2006 - 03:44 PM

There was a thread about this not so long ago (or maybe a while ago I can't remember) in the TTC or PreTTC section.

We're renting at the moment, and I have no drama's with continuing to rent. For us, we like the flexibility that can be associated with it. We can move if we want to save extra money without it being too much of a hassle, same with if we need more space etc. We don't have to pay when anything major breaks (The hot water system died here not long ago) so we save on those kinds of expenses too.

We had a meeting with a Lender who said that we had great borrowing power yada yada yada, but we've decided that we'll continue on renting until our daughter is in school so I can go back to work full time. We'd be able to afford owning our own home now, but we don't want to be 'stretched'!!

HTH

#18 shirl

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Posted 10 May 2006 - 05:49 PM

hi lovelies,
thanks so much for your ideas, it really confirms the confusion in a way, there are definite benefits either way, I don't feel alone with it though, so many of us are in a similar boat..
thanks again, your time is much appreciated wub.gif

#19 ...

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Posted 10 May 2006 - 07:12 PM

Aargh, stupid vanishing posts.

I just posted to say that I can't remember if I mentioned it in the PM, but I wonder about other options. I wonder if you could buy a place, while the market is low, then rent it out while you are off work? With tax benefits, it can be really minimal per week - we looked at doing this with a $650K place, for only about $160 p.w. out of pocket.

If you then rented a similar or cheaper place, it'd be much cheaper than living in your house, but you still get to buy while the market is low & benefit from capital growth...

Anyway, it's one of our advisor's great ideas, I'm sure he'll mention it! I'm really pedantic about paying every cent in tax we should, and not bending any rules - this is totally legit. smile.gif



#20 ...

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Posted 11 May 2006 - 09:58 AM

Sorry, yeah, MrsObey, you're right - it was 6 months when we bought, but I believe it's 12 now. (Our first property is our home anyway.)

I didn't factor that in - if you were getting the FHOG, you might ignore my suggestion! smile.gif

#21 Anita

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Posted 11 May 2006 - 10:34 AM

We did family first. We are renting and looking at buying in the next couple of years.

Some of the factors that contributed to us doing this were:

David's age;
Our employement and prospects;
Not being settled in an area we wanted to live in long term.

#22 hubby33

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Posted 11 May 2006 - 10:59 AM

Sorry for the long post... I got carried away.

The problem with buying a property and renting it out and using the tax benefits is that the tax benefits are definitely shrinking at the moment. Over the last 3 or so years a great number of people have found themselves shifted from the top 47c tax bracket ($6000+ in 2003) to the situation when from 1 July anyone earning less than $75000 is only paying a max of 30c (plus HECS, medicare etc).

So that means for someone earning, say, $65000 or $70000 and claiming rental deductions the govt would have paid 47% of the losses in 2003 and from Juyl they will only pay 30%. Makes a big difference to the tax advantages of negative gearing. Historically property has always gone up but it's unclear how much of this is due to negative gearing purchasers and how much is 'legitimate' (for lack of a better term) home ownership.

I think a lot of people will find their advisors recommending a better return in shares and other investments than property in the next decade.

Different story for the family home though since there is no capital gains to pay.

Personally we're looking at buying rather than renting because it has a number of advantages for us - we want semi-rural and it's not too easy to rent a 10 acre property; buying means you can improve the house/garden; it gives you that warm fuzzy feeling of proud home ownership.

Renting too has clear advantages - fixed costs (if it breaks the landlord pays to fix it), at the moment it's cheaper than a mortgage (most people who have recently purchased investment properties would know too well the difference between rent and mortgage payments), you can usually rent something you'd have no chance of buying.

#23 Old_User

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Posted 11 May 2006 - 05:20 PM

It's a big question in my mind too, but the more I think about it the more I prefer to just rent until i've had children because you really don't know when you're going to be having time off work etc. in order for you to live off one income. We couldn't survive on H2B's income alone even now, let alone if we had a mortgage. In the end it's a personal choice though smile.gif
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#24 Cher

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Posted 11 May 2006 - 06:18 PM

Hi,

I haven't voted but have you taken into consideration that once you have children there are always going to be expneses that just come up and can efffect your budget. There is childcare fees, clothing, food, school fees, school unifoem =, excursions, entertainment etc. They all add up and never going to go away.
But is there ever a good time to but your own home?

Best of luck with your decision.

Cheers
Cher

#25 telfy

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Posted 12 May 2006 - 09:06 AM

We've decided to have family before a house. At the moment we are TTC but also saving towards a deposit for our own home. We figure that the more we can save the better and it's worth it to have something that we really want, as opposed to having to settle. When we actually have a baby, I'm planning to still work as I'm in a job where I luckily can do it from home if I need to (so hopefully we shouldn't have any money worries).

#26 Kell

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Posted 14 May 2006 - 03:06 PM

QUOTE (allycat @ May 10 2006, 03:44 PM)
There was a thread about this not so long ago (or maybe a while ago I can't remember) in the TTC or PreTTC section.

We're renting at the moment, and I have no drama's with continuing to rent. For us, we like the flexibility that can be associated with it. We can move if we want to save extra money without it being too much of a hassle, same with if we need more space etc. We don't have to pay when anything major breaks (The hot water system died here not long ago) so we save on those kinds of expenses too.

We had a meeting with a Lender who said that we had great borrowing power yada yada yada, but we've decided that we'll continue on renting until our daughter is in school so I can go back to work full time. We'd be able to afford owning our own home now, but we don't want to be 'stretched'!!

HTH

This is us too. We could have brought but we would really have been stretched on one income for a while, and it was important to us that one of us was home with Finn in the early years. He is now 3, and our financial situation is about to get much improved (my clever hubby and yet another promotion!) plus when I return to work, we will be accustomed to not having that wage at all so we will be in a very strong position to buy. It hasn't bothered us too much (although i DO hate inspections!)

I am sooo glad we did it this way, simply because of our difficulties ttc, and that we werent able to conceive a #2 at all so maybe we would have ended up with zero if we had waited - who knows? Thats a fairly unusual factor though I would imagine.


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#27 Cate

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Posted 14 May 2006 - 05:05 PM

The "dream" of owning your own property is a new concept to me. I never really thought about it till I moved to Australia. Back home living in a private or government rental is no big deal. You own, you rent, whatever..... I don't see why it's such a big deal and is seen as a benchmark of success to some.

I own a flat overseas which I rent out but we rent a house here, and plan to buy an investment property pretty soon. Paying our rent and paying towards the investment mortgage will be cheaper for us than buying and living in our own place. We are TTCing now, there is no way I'm putting off having a family at my age, 31, just so I can "live the dream" of owning my own home. We get lots of comments about this decision, and it amazes me what some people think about renting with children unsure.gif

We're always told "but you'll have no stability". However I think that renting gives us stability ..... the stability to know that I can leave work for a while, stay home with my child and not have to worry about how we are going to afford mortgage repayments on one wage.

We will probably buy our own home one day, but I seriously think it will be a few years after we have children. For me, being locked into a mortgage in my early twenties was the furthest thing from my mind. I couldn't think of a more dull way to spend my hard earned cash. I would have missed many many opportunities that were priceless.

The origin of the word mortgage is very interesting.....

In the word mortgage, the mort- is from the Latin word for death and -gage is from the sense of that word meaning a pledge. So mortgage is literally a dead pledge.

Not something that would could describe my aspirations at age 21.... tongue.gif

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#28 Ellie

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Posted 14 May 2006 - 05:57 PM

I definitely agree with those people who have pointed out that in Sydney at the moment there is a huge difference in what you would pay in rent vs mortgage for a similar place which makes this a difficult decision.

We are paying $480/fortnight in rent but I think we would be paying around $920-1020/ fornight (?at least?) if we had a mortgage on a similar place.

I have also read that if you invest the money you save by renting, on shares or something, that this is a much more financially sound thing to do (because shares are booming at the moment and the sydney property market is really overheated). I.e. that buying your own place is not a very efficent way to spend your money.

But I don't know anything about shares so I would never do that. I guess it depends on why you want to have your own home, for us it is not about getting rich but I guess having that security when we are older and even tho investing in shares might be more financially savvy it just doesn't feel as "safe" as "bricks and mortar".

Another alternative option- Have you thought about not getting such a big mortgage e.g. buying an apartment instead of a house, something worth $300 000 instead of $500 000??? I don't know what area you live in so that might not be feasible at all. Also if you are wanting to have more than one child and you are in your 30s then you might need a bigger place (and want to take more time off work in "one hit" to have a couple of kids??)

We have also had this dilemma as we want to start having kids in the next year or two, for us we have decided to buy a place but not our "dream home"... a 2br apartment is all we will be able to afford, we can have 1 kid in an apartment and then hopefully upgrade one day??? (in 10 years? who knows?) It will be a struggle even to make those repayments whilst one of us is not working but I think it is *just* affordable.

It has definitely been about adjusting our expectations once we started researching this and realising that we can't "have it all", but as many people of my parents generation have pointed out to us, they also did not start with a big house or their ideal house, and worked their way up.

#29 toffee

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Posted 15 May 2006 - 02:02 PM

shirl

I voted for the buy the house....& my reasoning behind this is if your 35 & you want to buy a home, the average mortgage is around 30 years, so if you didn't pay any extra into it, then you'll be 65 by the time you've paid it off??

You may feel stretched when you have the bubs & whilst the sydney prices aren't moving in great leaps & bounds at the moment & probably won't be for a little while yet, i would seriously consider the buying the house option. If you wait, say another 5 years till your comfortable again after having had children, you may find the bank won't give you the standard 30 year loan term - they may say only give you 20 year term which means higher mortgage repayments over the 20 years than someone on a 30 year term.

Just something to think about....good luck. its a hard decision. Unfortunately one of the realities of living in sydney.



#30 mygeorgiegirl

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Posted 15 May 2006 - 03:46 PM

We've just purchased our first home - contract hasnt settled yet, we always wanted to be paying of a house before TTC...

Though now we are thinking of putting off babies for a couple of years, we had planned to start towards the end of 06.

We have decided that it will be nice to enjoy some time together before becoming a family, once you become a parent you are one for the rest of you life - so why rush - well that's what our opinion is anyway wink.gif
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