Given recent interest rate changes what % do your after tax salary is made up of your home loan repayments?
Is the 30% rule of thumb something you try to stick do? How much does this change between singles and couples?
What are your mortgage repayments as a percentage of your income?
LemonShapedRock on 11/09/2022 - 23:13
Last edited 11/09/2022 - 23:13
Last edited 11/09/2022 - 23:13
Poll Options
- 640% - 10%
- 910% - 15%
- 1315% - 20%
- 3320% - 25%
- 2225% - 30%
- 1330% - 35%
- 835% - 40%
- 940% - 45%
- 145% - 50%
- 2850%+
Comments
Perhaps OP meant to use brackets:
[0% - 10%)
[10% - 15%)
[15% - 20%)
I thought this was the case as well, until i found out this wouldn’t cover 50%
I desperately want to answer but something is holding me back.
Guess I forgot the first step. Buying a house, as Scomo said before.
Just get a good job that pays good money! 🫠
Gotta wait another year for that useless degree.
…and be born at the right time and into the right family.
Agree this is helpful. But bear in mind also that even for those of us not fortunate to be born with the silver spoon, just being born Australian puts us way ahead of the 99.8 per cent of the world's population.
In the lottery of life, we, my learned friend, have hit the jackpot. When things seem down, I try never to forget this.
0% then
0% can mean too many different things though (renting, living with family, own house outright).
Minimum repayments are 10%
Currently dumping 50% of my income in with the option to redraw if needed.
that's how it's done
.
100%
Which lender was this with?
the bank of missus Archi.. :)
Gross or net income?
OP mentions after tax salary
That’ll teach me for skimming 😂
Less than 5%. Unlike some borrowers who want it all now and borrow 70-90% of their property’s value, I lived in share houses most of my life, saved for decades before buying, and then bought a property that I could pay off quickly. Pay off, then relax, enjoy the freedom of not being a debt slave. If most people took my approach, the property market wouldn’t be so overvalued, and more people could escape from the debt-slave existence.
I don't think that strategy still works with house prices rising faster than wages. Stretching your borrowing capacity and buying asap seems to be the better strategy these days to avoid missing out altogether.
It depends when you buy. For example, prices have fallen in most areas since May this year. Prices stalled or fell in most areas between 2016 and 2019.
Also, my strategy would work if most people applied it, not if only a few applied it. I think it’s an ethical approach to home ownership instead of the current approach of overloading the system with competition for investment properties and get-rich schemes, thereby tying up most of the country’s disposable income in the property market.prices have fallen in most areas since May this year. Prices stalled or fell in most areas between 2016 and 2019.
That is for the informed. Everyone likes to live where they can't afford. Pretend it is alright with your friends than complain to strangers and ask for the head of RBA to be sacked.
@netjock: I don’t think the RBA is mostly to blame. Tax policy (CGT discount/exemption, negative gearing, etc.) and banking policy are mostly to blame. Also to blame is the tendency of most of the population to think like sheep and think it’s entirely normal and reasonable to take out a $600-$800k mortgage on a median salary.
Tax policy (CGT discount/exemption, negative gearing, etc.)
This is actually very minor. Not as much as people think. If you live in your home and you get an exemption, you have to live somewhere all the time. Sure there is deemed PPOR but how many could you have at once? Having tax to pay is a good thing because you are making money. Negative gearing is temporary. If people who are banking on it for the long term is going to run into cash flow problems eventually.
Also to blame is the tendency of most of the population to think like sheep and think it’s entirely normal and reasonable to take out a $600-$800k mortgage on a median salary.
Without those people you never get money being recycled. All those builders going bust right now. They would have been having a great time for the last decade with all the government grants. If you let them forever be rich then no money going to the poor. They must go bust so someone else can build a business in their place. But you do have a good point where people seem to want to spend every cent they have without regard for what happens if things go wrong.
My first serious house I rented out all the rooms (I kept a communal lounge, so don't think I made it into another room. I have seen people who have) to help out the finances and get ahead before I had a partner.
but you probably bought in an area that wont appreciate in value and probably has declined. the price of housing in areas of demand will stay elevated, because it is where people want to live.
I live where I want to live. I don’t want to spend my life sweating and stressing over how many $ I’ll theoretically be worth in 30 years. If the last 3 years have shown us anything, it is that life is unpredictable, nothing is certain, nobody knows what will happen in 10 years. Live for now, not for your future elderly self.
Me personally probably around 20-30% but that is only because my wife is on MAT leave when she returns to work (likely part-time) it will be 10-15%
I current throw in about 60% of my income into it though as i have always paid double my 'repayments' - i might be wrong but i read somewhere if you pay double your repayments from the get go your home loan will be paid off in within 10 years.
yeah pretty much say on 30 Years loan at 5%
paying double P+I amount you be mortgage free in 10-11 yearsbecause most of your payment is going toward the principles repayment where as if you drag it out, a lot of your payment end up in Interest and this sucker get
calculates each day and compound each month on your principal amounts, reducing principal amount will put a stop to this compounding machine and you be
mortgage free a lot soonerNot sure why i was downvoted im pretty sure i didntnsay anything offensive this is ozsocialist everyone here gets offended by anything
some people just don't like you are in good financial shape, paying off a mortgage in 10 years is a significant milestone and you should be congratulated
@Hearthstone: Honestly cant understand why anyone would want a home loan for 30 years?
The home loans are 'stress' test so you can make 4x the repayments in the future why wouldnt you just 'pay' more asap.
Ill note this is for owner occupier homes where there are no tax deductions, investor loans are a different story.
Was 31%, now is 38%
Will likely hit 40% when they pass on the 0.5%
Mortgage include the OzB obligatory 10+ investment properties or PPOR? Or the 5 deemed PPOR and 5 investment properties? You need to be very specific.
Don't forget the fiddling of taxes where you are on the OzB $250k and only paying $0 tax because negative gearing (I don't know how people can be deeply negative cash flow but lets just believe it).
"0 percent, I paid off my 2 million dollar house in 5 years" - Whirlpool User probably.
Then you got a big loan to put into Celsius to get 10%+ APR.
The figure is largely irrelevant … the key number is what percentage of your after tax salary goes towards paying non-deductible interest.
For example … if I'm paying massive amounts of my income in repayments but either have a very large offset, or am getting towards the end of the loan, it doesn't matter too much other than in terms of cash flow (obviously assuming one has the cash flow to cover it) as the interest bill will be a small component of the repayment. In either case, assuming your income remains appropriate, the loan could be readily be refinanced to reduce the demands on cash flow if that is the objective.
Equally, if the cause of those large repayments is to service deductible debt, it readily implies there is an asset attaching to that debt that could be liquidated if needs be.
This is how people imaginatively justify being a debt slave for decades. Creative accounting and taking advantage of the Australian government's dedication to inequality to ensure that "on paper" you end up ahead in the distant future. Meanwhile, lose your job, or quit your job, and the whole complicated arrangement of theoretical wealth transfer falls apart and requires a different approach.
Let me get this correct,
So when majority saying 10%, their mortgage repayments (interest and capital) 10% of their incomes (before tax or after ) per month?If RBA see this post, they would increase the rate to 20% lol
What should be, annual interest only component vs annual take home pay (x2 for couples).
Possibly some peopler are selecting <10% in the poll because they don't own a house and therefore no mortgage.
Or maybe it reflects the fact that Ozbargainians love a bargain and therefore bought when prices were low.
That's true, if you using interest only component vs take home pay, people with mortgage, figure will be under 30%, more towards 20% mark.
As if banks going to lend you $600k loan if you earning 80K take home, with 90% LVRI like to see how those 22 people got 50%.
50%+ really? That's very tough.
I think the only reason I'm comfortable is because of 0 kids, and if it turns to desperate times home being worth 2x mortgage so i can just be 10/10 worse off but not quite 11/10 worse off :'(
I ticked the wrong option, should be the second not the first option.
Minimum repayments are about 14% of salary but I'm overpaying so I pay about 25%.
You need to ask if people are paying off interest only.
4% interest on an $800k mortgage is $32,000 a year for example lmfao.
You’re right, that is quite a lot. Add to that $3k rates, $3k insurance, $1.5k water, $1k electricity, and you’re up to $40k/year without even paying back any principal.
A bit like renting, except you don't have to deal with a landlord, and you make money if the house appreciates in value.
I'd say, unless there is another major boom (unlikely for a while), or unless you sell it within a few years, the cost of maintenance would outweigh what you make in value appreciation. Houses don't last forever, and the costs of maintenance/renovation are much higher than many people realise. To keep looking and functioning ok, a house needs to be either continually maintained or completely renovated every 10-15 years.
Then there is also the cost of buying and selling. If it's not your first house, buying costs for a median-priced property are ~$40,000. The cost of selling is ~$30,000.
Then to determine whether you broke even or made money, you also need to compare what you made in value appreciation to inflation or to what you would have made if you'd parked your savings in a high-interest account/shares and continually added to it over the same period that you bought and sold the house.
A lot of people are conning themselves into thinking that they've made money by signing up to 30 years of debt slavery, when they actually might not make any money out of it at all.
@ForkSnorter: Hmmm, I've had $0 in maintenance in 5 years, and the place has doubled in value? Also, the value is the land, due to its finite supply, not really the house, hence why absolute shitboxes still go for good prices.
A lot of people are conning themselves into thinking that they've made money by signing up to 30 years of debt slavery, when they actually might not make any money out of it at all.
Lol, how much are you making by renting? Hot tip, every single cent of your rent is lost, never to return, ever. I'd rather buy, and not have to deal with renting, even if my place never increased in value.
It's not like your options are to live for free, or be a debt slave. The options are to be a rent slave, and be happy and own nothing, or be a debt slave, and actually have something at the end if it. Also, if you actually pay a mortgage over 30 years, you are doing it extremely wrong.
Hmmm, I've had $0 in maintenance in 5 years, and the place has doubled in value? Also, the value is the land, due to its finite supply, not really the house, hence why absolute shitboxes still go for good prices.
In that case, you've been lucky. It really depends when you buy and sell. However, that doubling in value only actualizes if you sell the property. And again, to determine actual gains, you need to factor in the costs of rates, insurance, buying and selling, inflation, and what you could have made if you'd had savings parked in the bank or shares, and how much you saved by paying interest instead of rent.
Lol, how much are you making by renting?
Hot tip, every single cent of your rent is lost, never to return, ever. I'd rather buy, and not have to deal with renting, even if my place never increased in value.I don't rent currently, I bought a modest property when prices were low. But I did rent for a long time, and don't regret it. Like buying and selling, it really depends when and where you rent. I was lucky in that I rented an apartment with an amazing view worth ~800k for only $400/ week. The suburb was in demand for students, so I sublet one bedroom for $220/week, which means I only paid $180/week for 10 years to live in the most beautiful place I've ever lived. I look back on that time with fondness. Interest was fairly high over most of that time, so my savings got a bit of a boost. Granted, I might have made a bit more money if I'd bought earlier, but I wouldn't have been able to afford such a nice place in such a convenient area. And again, if I'd bought a property, I would have been slugged with rates, water, insurance, interest, and maybe even body corporate, which would have totalled more than what I was paying in rent.
My point is, we shouldn't oversimplify and generalise. We've been sold the lie that buying a house is free money. Sometimes it is, sometimes it's not. Sometimes it's hell. The same goes for renting. We've been sold the lie that renting is crap and a waste of money. Sometimes it is, sometimes it isn't. I treasure the first half of my life when I lived debt-free and carefree, and experienced a lot of different houses/apartments.
It's not like your options are to live for free, or be a debt slave. The options are to be a rent slave, and be happy and own nothing,
Own nothing except money.
or be a debt slave, and actually have something at the end if it.
If you manage to pay it off.
@ForkSnorter: Great logical and thoughtful post, it seems like you have enough life experience to assert what you’ve said. Thanks for having a brain.
Oh and in reply to your first comment, yep. I’d be surprised if people spend $40k a year on rent. I guess it’s possible if they’re a) earning Alan Joyce money and b) renting a very luxurious house in an “upper class” suburb. People will do whatever they can to rationalise spending dumb amounts of money on property. The amount people spend solely on interest payments far outweighs the amount they would “waste” on rent.
We put over 50% into mortgage payments, even though it’s about 20% minimum. Trying to get rid of our debt quick, hopefully paying off house in under 8 years.
"The Federal Reserve may have to raise interest rates above 5 per cent to get a grip on surging inflation which is showing signs of becoming entrenched in the world’s largest economy, according to UBS Asset Management’s Barry Gill.
Mr Gill, who is head of investments at the $US1 trillion ($1.48 trillion) asset manager, said he was not surprised by Wednesday’s hotter-than-expected consumer price index which showed annual headline inflation climbed 8.3 per cent in August.
Core CPI, which strips out volatile food and energy components, advanced 6.3 per cent. All measures came in above forecasts.
The data validated Mr Gill’s long-held view that inflation is proving stickier than markets and central banks had anticipated, a scenario which increases the likelihood that policymakers will be forced to tighten the economy into a recession.
“We have had a persistent dynamic this year whereby people have consistently anticipated a topping out of the inflation rate, and it just hasn’t been materialising,” he told The Australian Financial Review."
I think we are heading for 7- 8% rate in the next 12-24 months which is normal long-term average and what it used to be before the era of cheap money.
Looks like the cheap money era is ending.Mortgage rates in the US is already at 6% and borrowing plummet 20%
Anyone with a large mortgage in the last two years on 2-3% be prepared to pay double triple that amount in the near distant future
Currently 15%.
Bought in 2011 and would have paid it off by now had I kept up my more than double repayments. I’m living in a rental in the city paying another 15% of my income on rent, but that’s being covered by the rental income on my unit. I’ve not paid any interest for the last 2 years as my offset account is over the amount remaining, luckily with these rates going up 😂😂.
When I got down to 100k left on the mortgage, I decided to start redrawing from it to fund other investments, rather than dwindling my savings down which I want to use to buy a house (I have unlimited redraw). I’ve been wondering if I should just pay the mortgage off or not, but that would eat into my house deposit
Moved back home this year as a 2 year plan, after I tried to enter the housing marking right as the boom hit during covid. I kept getting outbid for properties by over 100k and I decided just to call it and wait for some stability. Maybe even a downturn..
Why are the same values on 2 different voting options?
eg, 10%, 15%, 20% ????