who has these $400k mortgages ?

[WillG]

The increase will add $68 a month to the cost of servicing a $400,000 mortgage on top of the increase of about $50 imposed by banks when they widened margins last month.

http://canberra.yourguide.com.au/ne...-climbing-until-inflation-curbed/1176492.html

If I was a first home owner and had a mortgage of $400k I would have problems paying the mortagage. Does anybody on this form have a $400k mortgage on their PPOR ? Who has mortgages of this magnitude ?

 

[alexlee]

My mortgage on the PPOR is bigger than $400k.

Why not? 'Normal' couple, both working, making say 60k a year each. $120k income will allow you to borrow $400k.
Alex

 

[WillG]

My mortgage on the PPOR is bigger than $400k.

Why not? 'Normal' couple, both working, making say 60k a year each. $120k income will allow you to borrow $400k.
Alex

So you would be using > 30% of your gross income to pay the mortgage and be classed as struggling then

 

[Sunfish]

'Normal' couple, both working, making say 60k a year each. $120k income

Wow! Is $120k "normal"? I'll have to get out more.

 

[alexlee]

So you would be using > 30% of your gross income to pay the mortgage and be classed as struggling then

Depends on how much I make, doesn't it........... Fiance doesn't work and I make more than 60k.
Alex

 

[alexlee]

Wow! Is $120k "normal"? I'll have to get out more.

60k per person is the average, I believe. If both the husband and wife works, it totals $120k.
Alex

 

[Trogdor]

http://canberra.yourguide.com.au/ne...-climbing-until-inflation-curbed/1176492.html

If I was a first home owner and had a mortgage of $400k I would have problems paying the mortagage. Does anybody on this form have a $400k mortgage on their PPOR ? Who has mortgages of this magnitude ?

I would think a 400k mortgage would be on the lower end in capital cities for PPORs (especially for couples buying together). You couldnt get much for < 500k these days.

 

[sash]

WillG

Lots of people in Sydney, Melbourne, Perth, Canberra, and Brisbane do.

If you are buying a house within 15klms of these cities it would be the norm to pay 400k-900k for a home. Whilst not everyone would borrow the full amount, in most instances people borrow a lot.

Remember as Alex pointed out if two people are earning 60k each this represents about 85k-93k net income per year. Even on 50k each a couple would still have 75k-80k net. On a 400k mortage...this would represent about 36K per annum on based on a 8.15% interest rate over 30 years. So people are still comfortable....the issue is when people have one income or have children...it really gets hard then.

I have friends...a couple in Melbourne who earn 210k combined and about 150k net. They still struggle to pay the 500k mortage....everyone budgets differently. But I would have thought on 150k net.....most people would be very comfortably be servicing their mortgage.

Cheers
Sash

 

[WillG]

the issue is when people have one income or have children...it really gets hard then.

I was reading somewhere we are in the midst of a baby boom. Child care, one income, part time work etc.. would certainly eat into the $$'s.

I guess two income families are becoming the norm by necessity

 

[sue78]

My mortgage will be about $280k when I move into my IP this year but I am hoping to get it down to around $150k before then or pre-pay interest for the next 3 yrs whilst I earn enough to pay it off.

Our income is low and jobs is unstable.

 

[artemis]

my mortgage is over $400,000.
just me paying.

and my income would not be considered high.

aren't the banks great?

 

[The Y-man]

Wow! Is $120k "normal"? I'll have to get out more.

Lot of DINKs these days are 2 x six figure incomes...... they can then "afford" a 7 figure house on a 103% loan.... and 2 x car loans....... quite common in Melbourne/Sydney I imagine

Cheers,

The Y-man

 

[alexlee]

Lot of DINKs these days are 2 x six figure incomes...... they can then "afford" a 7 figure house on a 103% loan.... and 2 x car loans....... quite common in Melbourne/Sydney I imagine

Sounds like a lot of my colleagues. They'll become seriously stressed when/if they have kids, though.
Alex

 

[pieman]

Lot of DINKs these days are 2 x six figure incomes...... they can then "afford" a 7 figure house on a 103% loan.... and 2 x car loans....... quite common in Melbourne/Sydney I imagine

Cheers,

The Y-man

so are paid off 7 figure homes...
pieman

 

[VYBerlinaV8]

I think the idea of using proportion of income needed to service a loan is perhaps incorrect. For example, my last job change came with a hefty pay rise, and I spent the extra on a new IP and more savings/investments. This means my committments in terms of a percentage of income have risen, even though my consumer spending is unchanged.

Another way to look at it would be to say that a person earning 200k per year can afford to spend a higher proportion of their income on a mortgage than someone on 20k per year, if their other expenses are the same.

Go even deeper, and in my case I spend about 80% of my income on mortgages, investments and savings. My wife buys the other stuff and pays the bills.

My conclusion, I guess, is that to classify people as 'struggling' because of a percentage of income issue doesn't necessarily reflect what's really going on.

 

[Perp]

Wow! Is $120k "normal"? I'll have to get out more.

Curious... did you think that was too high or low?

 

[twodogs]

Our combined income is about $120k gross, we got a $650k mortgage at 80%LVR...

How? Ask a broker, on this forum. Couldn't have done that without help.

Why? Because 2 months later I had the cash to pay down half. I then re-draw this and invested making most of the loan deducable.

A year later I bought the plasma.

It's not just the size of the mortgage, it's what you do with it.

 

[ianvestor]

I'm one half of a DINK team at the moment, she's on 52k and I earn a lot more... our mortgage is $600k on the ppor.

Having said that, we are not first home buyers! I think that's the point, FHB's would be crazy or on a high income to start out so big.

 

[Chris.R_WA]

We started out as DINKs (still are actually), with combined salary of $100K.

First PPOR was bought with 5% deposit and 350K mortgage, and I thought that was "reasonably" manageable and fairly average.

Close friends, DINKs on combined 95K recently bought first PPOR in inner ring Perth suburb with 600K mortgage .
I asked them why they didn't at least "try" and keep it under the 500K stamp duty exemption..."wouldn't want to live in one of those places!"



Chris

 

[sash]

You're kidding aren't you!

You are a smart man Chris_WA!

If my maths serves me correctly you probably have net income of something like 79k and your mortgage is costing you about 31k per year after yesterday's increase, leaving you withh 48k to live. Even with children in the picture you are still ok.

Your friends probably have around net imcome 77k and a mortgage costing about 53k per year....that leaves them a grand total of 24k to live on. Do they run a car? When was it last they went out?

They are sailing very close to the wind....one more rate rise will tip them over the edge. They should pray that they do not have children....because they will have nothing left as the Perth market is heading down!