Simon said:
If you are renting rooms at that level you can probably make it work.
If you don't then you need to take responsibility. You may lose money if the property is repossesed.
Think hard over it. If you are confident you can manage then see a broker. Expect to pay just over 7% for this style of lending. Anymore and you have the wrong broker.
All the very best mate,
Thanks for the feedback Simon
Simon said:
Hi, EP,
You have to include tax. That's a very big chunk of your income. Your income is nowhere NEAR $28,800 since you have to pay tax, pay interest (which will be around $15k on a $250k loan interest only).
Your own budget just says whether you can ACTUALLY service the loan. Whether the BANK thinks you can service the loan is a different issue. Even after you decide you can service the loan, talk to a mortgage broker.
Can you detail your breakdown of your $600pm expenses? What have you included / not included? If that figure is correct you should be saving at least a couple of thousand a year. If you’re not, you’re excluding something. As I’m sure you’ll read in other posts and books, those ‘luxuries’ are the things that kill your budget.
How much cash savings do you have at the moment?
My own view: I think it’s too early for you to consider buying property. The market is flat, and your income situation is risky. You either have a big deposit (as others mentioned nodocs have low LVRs) or need more income.
My suggestion is to read all of Jan Somer’s and Robert Kiyosaki’s books. Learn how the numbers work, and understand your own financial situation. You do NOT want to have a mortgage and realize you can’t pay it that month because you just spent it on a new set of drums. Buying property isn’t as easy as it looks.
Alex
Hi Alex, thank you very much for your always valuable advice and feedback.
That $600 average expenditure was from last year. My expense has grown slightly higher now (the land lord has just increased the rent again).
My weekly expense breakdown:
$90 Rent
$60 Food and daily consumption
$10 Fuels
$10 Phone and Electricity
I got roughly $1,500 in my savings account.
A big deposit approach is doable since as I mentioned in my other posts that I have my parents to back me up.
The other thing is to raise my income, I work two jobs now, running my own business and doing a part time job. So I guess I'd better focus on how to make my business more profitable/more productive.
The other part time job is only temporary, I do it because I feel it helps me to build my mental/characters/communication skills/customers skills, and I also enjoy doing it (unlike my own business which is a one man show, I know I've to leverage other people's skills/time/expertise in order to grow my business and to succeed faster and more efficiently).
Ah the Kiyosaki's books, I've finished reading the Rich Dad Poor Dad and the Cashflow Quadrant. I've just finished reading Anita Bell's book (Your Mortgage and how to pay it off in 5 years).
I'll buy Jan Somer's book once I finish reading the other books, I've got heaps of books to read (Dale Carnegie, Anthony Robbins, Napoleon Hill, Brian Tracy, John Maxwell, and heaps more, but mostly are phsychology, Christianity/spiritual, leadership, self-help kind of books).
I do admit that I'm very easily tempted to buy musical instruments from time to time (always from Ebay
)
I have roughly $3000 worth of music instruments and equipments, I don't think I can live my life without music and the instruments too
Maybe you're right Alex, that I'm not in a good position (both financially and mentally) to get into a mortgage and buy a house at the moment.
I do discuss my circumstances with my parents from time to time over the phone, they always ask how's the market going here in Brisbane.
Well, meanwhile, I think I'd better keep saving some more money from my business and part time, and also keep learning property investment as per your advice.
Thanks again Alex.