Abandoning an Old Home Worth $ 1.2 Million: Is It Worth It?


Three years ago my wife, I and our three children moved to the south coast of New South Wales, renting a beautiful house for $ 600 per week. I am 45 years old and I earn $ 120,000 a year, while my wife earns $ 59,000. We want to buy a house, but the real estate market here starts at $ 1.2 million for a regular old two bedroom house. We saved $ 400,000 and we can borrow $ 750,000, but I firmly believe it’s a big loan to pay off on an old house. I’m a home handyman, but it’s pretty scary thinking about how much effort and hours it takes. Can you convince me that now is really the right time to buy a house? FK

No I can not. History teaches us that the best way to lose a lot of money is to buy an overvalued asset during the height of a boom.

Many homeowners may find they have over-committed if interest rates rise. Credit:Glenn hunt

I know real estate agents like to hang pictures of bearded old men on the wall, captioned “He waited for house prices to drop”, but I suggest you wait and see what happens when the rates go down. interest start to increase.

If mortgage rates go up to 5%, which is possible, your rent equivalent would only pay off a loan of $ 440,000 over 25 years, which is significantly less than the principal you have been offered to borrow now. In such a situation, I suspect that many homeowners would find that they are over-committed.

I am a 55 year old professional woman who earns approximately $ 116,000 per year. I have no more debts, having paid off my house. I have $ 245,000 in a retail super fund and $ 220,000 in the State Authorities Superannuation Scheme (SASS) defined benefit plan, to which I can no longer contribute but maximize contributions to the retail fund. I have $ 45,000 in savings. I plan to work full time until at least 67 years old. I want to maximize my retirement savings. Do I have to borrow to invest? MM

I don’t think this is a good time to borrow to invest.

The stock and real estate markets are both eagerly awaiting higher interest rates, possibly as early as 2022.

Continue to save as much as you can and invest your retail super fund in a mix of “balanced” and “green” funds, as the latter seem to attract a flood of investment.

I’m 49, single, healthy, and IT work at a big bank and earn $ 235,000 a year. I am awaiting an inheritance and am also considering extending my mortgage to the maximum amount – which would be $ 525,000 more at an 80 percent loan-to-appraisal ratio – to help me make one. of the following three things: 1. Buying a business and changing jobs; 2. Buy an investment property; 3. Buy exchange traded funds (ETFs). What do you think? JM


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