How much are your Mortgage Repayments?? Mortgage Vs Rent...

[Bathsheba]

When we had our last mortgage it was nearly $500 a week. Both DH and I were working and we only had one child, she was school age. When we decided to have more children we knew we would have to sell and rent.

We've been very happy renters for 7 years now. DH is a banker and like Lulu mentioned sometimes renting can be a much cheaper and wiser decision. Please don't panic if you feel that your mortgage repayments are getting too much. There are other ways to secure a nest egg that are just as good as a house. When we sold our house we put the profits into shares and DH has self managed that. Unlike a house where you can't liquidate a portion of the asset ie sell the spare room, when we have a financial crisis we can sell some shares without threatening the whole nest egg. Our portfolio didn't suffer during the GFC either, it actually grew because we didn't sell during that time (DH held his nerve) we bought!

Anyhow I'm not saying that our way is better... It's just an alternative. Here in Australia there us huge pressure on young couples to get into the property market and it's not always the wisest thing to do. At the end of the day make sure your money is working for YOU... Don't become a slave to it. Remember also that while renters seem to be giving their money away to landlords people with very little deposit on their mortgage also end up giving away hundreds of thousands to the bank in interest. DH is hoping that if he continues to invest wisely we may escape having to pay the bank much/any interest at all when it comes time to buy a house... Maybe we will be able to buy one outright... No mortgage. In the meatime we have been fortunate enough to live in a big house on a big block of land (worth well over a million) in a quiet leafy suburb with quiet neighbours. Quality of life should always come first

ETA: I probably also need to add that our decisions have been influenced by several other factors. DH and I are old enough to remember the situation in the 80s when interests rates were up and above %17 and many people had mortgages higher than what their homes were actually worth... A horrible situation indeed. Also my parents were slaves for a mortgage and the pressure contributed to their divorce... Overnight the house and all assets were sold ... It was like everything they had worked for vanished. My mothers boyfriend then squandered the bit that was left and when she finally left him she found herself in her 40s with barely a penny to her name. Debt collectors were constantly hounding her for the boyfriends debt too.

Not meaning to scare... Just put my choices in context.

[*Beema*]

Our is definitely on the higher end of the scale, $1,725 a fortnight four our new house and we have an investment propery on top of that which is $1,100 a fortnight, but we get back in $680 a fornight, the rest is negatively geared. In proportion to our wages it depends on how many hours I work a month but on average it is about 50% of our wages, excluding the income we get in for the rental property. But we are selling that at the moment - when it sells to take the pressure off as such, it will clear the investment loan and take a good chunk out of our repayments on our current house as well, we don't have any penalties for paying our loans off earlier. I also put $300-500 extra on our current house a month depending on what I have brought in to reduce the length of the loan, the investment loan gets $100-$200 extra a month on it as well, as I have just set the Direct Debit to be that bit higher JIC and can always redraw the extra as it just sits there reducing the interest on the loan, and it makes it easy when rates etc come around ad I have the extra money sitting there.

The new house is sustainable as well, runs on full solar power, recycled and rain water, huge amounts of insulation etc, so we are seeing big savings in our everyday living costs, which is why the cost to build it was so much more than another house of the same size.

But for the value of both of our properties has gone up substantially, both times buying then building at the right time and right place.

[Astrolady]

Our mortgage is $430 a fortnight, and that includes an extra $90 a fortnight that we pay. But we did build 14 years ago and we got our house and land for $106,000. We have used equity twice adding an extra $30,000 onto that, hence the extra $90 a fortnight to pay the $30,000 off quicker LOL.

[mrsmac]

Our house is a little 3 bedroom on a busyish road but it is in a good(not super posh or anything) area of Sydney. DH earns about 75% of what i earn so his income is all we have after mortgage takes mine so definitely more than 30%.
We chose to spend more and stay in the area we work in and where I grew up, if we had moved we could have got a lot more house for our money or paid a lot less.

[Roryrory]

Ours is low - $268 pw (and damn well fixed until September - grrr!) Once it switches to variable it will be around $240-250. We bought our house years ago so our mortgage is very low - probably to rent similar we would be up for $600 pw in rent.

Also on capital gains tax - Bun is right in that primary residence (your home) is not subject to CGT but if at any stage it has been rented out you will have to pay some CGT based on that fact. For example, if your home is worth $300k and you rent it for a year while you move overseas, and during that time it increases in value to $450k, you will pay CGT on $150k when you come to sell it. It's been years since I practised in this area but I am pretty sure an individual gets a 50% discount, so if the home in above example was in a person's name (ie: not in the name of a company) you would only pay CGT on 75% (ie: 50% of the gain). Plus it is calculated at your base tax rate. So if hubby earns heaps the it is better to have the house in the wife's name, because her tax rate will be lower.