Million-dollar borrowers

[investor888]

These an article in the Australia today about some couple, who were stupid enough to get a 1m+ home loan on a PPOR, and are now complaining that they can't get government handout's from the Rudd Government's stimulus package.

What's the bet that when the husband looses his job in IT, they'll be the first ones blaming everyone else but themselves for their stupidity.
Live within your means people!!

Million-dollar borrowers breathe easy

http://www.theaustralian.news.com.au/story/0,25197,24743412-5013404,00.html

 

[boomtown]

This is a classic example of a couple that walked into a mortgage broker and asked "how much can I borrow?".

 

[Rolf Latham]

Hey Boom

Then there should be the "Advisory Broker" retort.

Mr and Mrs Client, lets work out what the banks will "give" us.

However, more to your personal situation, what would you feel comfy putting toward a mortgage every week ?

Often the bank will lend to repayments of say 4 k a month, but the borrower is only ok to go to say 550 a week. Even though the assessment calcs of max lend will say they can lend more than that, you must take into account the clients stated comfort level.

If you earn 50 k you can borrow x, if you are on 250 k you can generally earn 6 to 7 x because your fixed costs are theoretically the same as a person on the 50 k income as for the 250 k. Not how it works in real life though.

ta
rolf

 

[IndexFund]

Sounds like a credit happy couple. Do they buy their Aldi groceries on credit cards too?

And seems like their image is far too important than financial sense.
They want to LOOK rich, but deep down are poor.

 

[MichaelW]

If you earn 50 k you can borrow x, if you are on 250 k you can generally earn 6 to 7 x because your fixed costs are theoretically the same as a person on the 50 k income as for the 250 k. Not how it works in real life though.

Rolf,

Does apply in our "real life" example... We're one of those upper income type families, but our fixed expenses are still very moderate as we live well within our means. That's one of the reasons we can afford to service the amount of debt we've taken on quite comfortably. However, it would also suggest that because we've already got a tight family budget, that there is less room to "tighten" it if we had to in an exploding interest rate environment.

Just thinking out loud.

Cheers,
Michael

 

[Lamingtons]

Nice plug for her business though...

Oh no designer frocks for her this xmas, that's really sad. I used to receive invites to launches and stuff. LOL don't see me crying because I haven't been able to go into Chanel for the last three years.

 

[IndexFund]

Nice plug for her business though...

Oh no designer frocks for her this xmas, that's really sad. I used to receive invites to launches and stuff. LOL don't see me crying because I haven't been able to go into Chanel for the last three years.

And her BMW will not get a delux super wash and wax this month. Boo hoo.

 

[ianvestor]

These an article in the Australia today about some couple, who were stupid enough to get a 1m+ home loan on a PPOR, and are now complaining that they can't get government handout's from the Rudd Government's stimulus package.

What's the bet that when the husband looses his job in IT, they'll be the first ones blaming everyone else but themselves for their stupidity.
Live within your means people!!

Million-dollar borrowers breathe easy

http://www.theaustralian.news.com.au/story/0,25197,24743412-5013404,00.html

I agree that perhaps they are not living within their means, and that's pretty stupid (financially stupid).

However I agree with Ms Barassi when she says means-testing is unfair. It always is.

 

[evand]

Why is this couple getting these small minded attacks on this forum? Whats the problem exactly?

 

[MichaelW]

Why is this couple getting these small minded attacks on this forum? Whats the problem exactly?

Agree completely!

I think its another case of tall poppy syndrome. These guys have a lovely house and a nice lifestyle by the sounds of it. They have four kids and want to do the right thing by them. They're smart enough to watch their cash flows and cut spending when times are tough, and are breathing a sigh of releif now that rates have come off a bit and given them some relief.

I don't see how this makes them inherantly evil in some way...

Cheers,
Michael

 

[IndexFund]

Why is this couple getting these small minded attacks on this forum? Whats the problem exactly?

Re-read the thread.

Thisn couple tries to look rich and complain when they can't afford it.

 

[The Y-man]

I agree that perhaps they are not living within their means.

Not "perhaps"....."definitely"

When they initially took out the loan, @ 8.25%

Interest: $82,500
Income after tax approx $126,000
Left to spend: $43,500

Then the CAR thing $12,000

Left to spend $31,500 for a family of 4 kids..... that's stretching it with very little leeway (and I assume million dollar homes have not so cheap maintenance!)

The Y-man

 

[RumpledElf]

I think its another case of tall poppy syndrome. These guys have a lovely house and a nice lifestyle by the sounds of it.

4 kids in an unrenovated (lovely?) 3br house doesn't sound like a nice lifestyle to me.

 

[evand]

Do you mean 're read the article'?

They are on $180k pa. That's a pretty good wage and i dont think they are trying to 'look rich and cant afford it'.

Even if they were, why all the negativity and small mindedness?Hardly the attitude of successful investors on a property investment forum.

I don't get it.

Re-read the thread.

Thisn couple tries to look rich and complain when they can't afford it.

 

[IndexFund]

Do you mean 're read the article'?

They are on $180k pa. That's a pretty good wage and i dont think they are trying to 'look rich and cant afford it'.

Even if they were, why all the negativity and small mindedness?Hardly the attitude of successful investors on a property investment forum.

I don't get it.

Buying a million dollar house is something not many smart investors would do. Buying 3 houses with 1 million dollars, now that's another story.

 

[Sunfish]

Evan has a point.

Somersoftians spend a lot of time pontificating about how others live. And usually they are critisising their own clients. Get over it.

 

[boomtown]

Hey Boom

Then there should be the "Advisory Broker" retort.

Mr and Mrs Client, lets work out what the banks will "give" us.

However, more to your personal situation, what would you feel comfy putting toward a mortgage every week ?

Often the bank will lend to repayments of say 4 k a month, but the borrower is only ok to go to say 550 a week. Even though the assessment calcs of max lend will say they can lend more than that, you must take into account the clients stated comfort level.

If you earn 50 k you can borrow x, if you are on 250 k you can generally earn 6 to 7 x because your fixed costs are theoretically the same as a person on the 50 k income as for the 250 k. Not how it works in real life though.

ta
rolf

Rolf

My comment was not intended as a shot at any MB and I apologise if it came across that way. However it is truely frightening what the banks will permit you to borrow for a PPOR - far beyond my limits of comfort.

As far as tall poppy comments go - I actually dont think 180k is *that* much. Not enough for a 1M PPOR mortgage thats for sure (even if it is split over 2 income earners with the tax advantages that entails - although I do wonder whether the misses' internet business actually makes any profit or is just a dollar swapping exercise to keep her busy)

 

[Rolf Latham]

Hiya Boom

Didnt take the comment as a Broadside at all.............coz its true, many brokers and branchies just dont think that far

ta
rolf

 

[tubs]

Re-read the thread.

Thisn couple tries to look rich and complain when they can't afford it.

For some reason you seem to be posting a lot of negative things. I dont know why.

Perhaps you should re-read the article.

Both are self-employed, so are getting off their bums and showing some initiative.

They have 4 kids. Good for them.

When times got tougher they sold their IP. Sensible choice.

Then they curbed their spending. Wise move.

Then they reduced other costs like for Christmas. Very responsible.

They'll be saving the money from their interest rate cuts. Forward thinking.

They made some comments on means testing, but that's hardly a bit time winge. Its just an opinion.

 

[Lamingtons]

Ok i'm re reading the article again.
I'm not tall poppy, i'm get excited hearing about other people's million dollar houses on this forum.
The article is trying to say that everyone is doing it tough including people who are in the so called wealthy tax bracket.

What I don't understand is that they took out a $1M mortgage in January. At this point in time most people thought that interest rates were going to keep rising and some experts were predicting it might hit 10% (or for some people here it did). It was not like they bought the place when interest rates were 6% and the next day it increased by 2%.