While the article below is intended as a general point, regardless of your exact loaction, I can confirm that in Sydney, Australia, the prices of property have been rising very highly, and in my view, are reaching a point where they are likely to leave quite a lot of pain witgh the prople who have leveraged to the maximum, and found that there is very little left to work with as and when the cost of loans goes up.

 

While rates for loans have been hostirically low, there is a clear indication from history that rates will at some time rise and I am not sure if all the households out there are ready for it.

Some people are even looking at options liek buying homes further out of town and commuting into the city centres.

This is something that I did some time ago, and the article on the economies of commuting is here for your reference from the Sydney Morning Herald.

While there are certainly some benefits in having a slightly cheaper house when you are living away from work, you do need to factor in the cost of transportm, time and the like.

 

I think however, that a few years ago, some lending practices, in my view, were a little loose and we are starting to see a return to the higher risk loans with little or no deposit, and people borrowing the maximum they can afford to repay now. Of course, when rates do go up, this will be very problematic, in that some people’s budgets may not make it to stretch further.

 

Of course, on a positive note, there are more people who have been utilizing the lower rates to get ahead on their mortgages and this is a very positive step.

 

I know that even of you have a higher rate mortgage, because you may have used a special loan to consolidate other debt into one loan, and have a slightly higher interest rate, it is really important to get in there and pay as much as you can in extra repayments.

 

These will help to provide a buffer when the times are leaner and also give you an added peace of mind which is priceless in my view.

 

Extra Repayments and Extra Deposit

 

It could be argued this is very basic information, but generally, the more you repay on your variable rate loan, the better off you will bem both from the point of view of paying down your debt sooner as well as managing to also build in a security buffer of extra repayments.

 

Even extra payments as little as ten doallars a week can make a difference over the life of a loan. If you make no further repayments on a loan set over thirty years, you will typically find the first seven years are just paying off the interest which is quite scary.

 

I wncourage you to make sure that you are always paying as much as possible off your loan for maximum benefit and ownership of your home.

 

 

 

 

 

 

Distance away from home

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