Bringing It All Into Perspective
There is a lot of conjecture out there in the market about the ability of young people today being able to afford a mortgage. After reading this you may just believe that the truth Is – it’s all in how you manage your money in the first place. Surprise! Surprise! Nothing has changed about that in hundreds of years.
Easy Money
Over the years, as the public began to be aware that investing in property was a good thing, a new industry blossomed. Mortgages!
With large tax incentives all round, a bricks and mortar asset to insure against to satisfy your lending institution and you could easily be on the way to having your first – or fifth – or tenth mortgage, often at 100% of the purchase price, sometimes more.
The institutions, whilst still canny with their money, are more than willing to loan money for all sorts of things and this is where the trap lies. Twenty-somethings are investing in loans or higher credit card debt more than ever before.
Most people will be unaware that the repayments on a $20,000 credit card will be around the $600 mark per month. If you have a personal loan for $20,000, for a motor vehicle as an example, you are looking straight down the barrel of a $500 monthly repayment.
Amazing Mortgage Fact
Now check out this last little bit of data.
Did you know that the repayments on a $100,000 mortgage, 4.5% interest over 25 years is just $555 per month? Amazing.
The two debts mentioned above are relatively small on their own. Together, however, they can have a big impact on just how much money you can borrow for a mortgage. A bank will automatically cut your borrowing power by up to $200,000 as soon as it sees debt like this.
This is where Fountain Property Group like to help flesh out the details for you. We see a lot of disappointed faces in this business. It is amazing how this form of debt can reduce your service ability.
When we are educating our clients. We ask the hard questions like …In the short term, can you see the value in catching the train for a little while? To get that extra money for your mortgage is it worth forgoing the stereo or is it worth giving up your trip to Greece? You may answer yes or no to these questions. There is no right or wrong answer. The choice, however, will determine your living arrangements for a long, long time to come.