First Home Buyer buying in now

Yeah we are! Please tell me how you work it out. I know I can look it up on the internet but is there an easy formula or something?
Year 8 was a very long time ago.

 

I see this all the time, and I get the logic behind it, but the reality is for many people, this can really mess with you psychologically. Keeping a positive attitude is half the battle, and if you're constantly worried it can lead you to make rash / bad decisions. You can tell yourself "well I planned to live here anyway" all you like, but for many, the thought of taking a few hundred k paper loss weighs heavily. The sleep at night factor is the key here.

 

Was this written in the 1990;s?

 

Interest rates are at historic lows - just look at this chart of where the RBA cash rate is sitting.

Factoring in affording a property at a variety of interest rates is prudent to ensure you're not getting yourself into undue financial burden - but this doesn't mean baulking at any interest rate rises. Interest rates rise, interest rates fall, many have forgotten this and have gotten used to the constant reduction in interest rates for years and now squirm at the idea that the rises might need to start coming down the pipe.

Buy what you can afford and are happy to pay - factor in what the interest rates could rise to in the future (can you afford said property if rates were 7%?). That should be the basis of your decision.

 

Super bad pick, IMO.

 

Ya lor, well said.

 

Thanks again for all the advice!

 

There is more to be taken into account when buying a home, as opposed to an investment. It’s very subjective.

My wife and I bought our first home in Vic last year for around ~$850k, which leaves us about $9k p/m buffer after our mortgage, excluding all other expenses. That allows us to save without having to scrimp. That was important to us.

We could have opted for something cheaper, and spent a lot of time looking at cheaper properties, but for us a 4br home on a 600m2 block that didn’t need any renos and is a 20min train from the city (in a nice quiet suburb) was ideal. We didn’t want to be forced to move when we have kids and plan on living here for 10+ years.

Luckily that price bracket in our suburb seems to
have done pretty well over the last 12 months, so we’ve probably generated some equity. But for us that was secondary to finding something that didn’t totally kill our budget and we could live in for the foreseeable future. If interest rates rise, they will impact our ability to invest in the future, but we won’t regret our first home in the meantime.