We commonly hear that you are under mortgage stress if you are paying more than 30% of your income towards your mortgage for your principle place of purchase.
I was wondering if there is a figure that exists for investors. EG if more than 20% of your income goes to paying the costs of your investment property you are under stress.
I know each persons circumstances are different and you are most likely under mortgage stress if your investment is costing you more than you can save, however, is there an industry figure for investors to go off?
We commonly hear that you are under mortgage stress if you are paying more than 30% of your income towards your mortgage for your principle place of purchase.
Its a ridiculous method of working out Mortgage Stress.
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Its a ridiculous method of working out Mortgage Stress.
It certainly is. If you're earning $50k pa, have three kids (breeding bribes aside), a non working partner and $20k worth of consumer debt and paying 20% of your income on the mortgage then you will be under far more stress than a single earning $150k, no other debt and paying 35.89% of their income in mortgage repayments.
It certainly is. If you're earning $50k pa, have three kids (breeding bribes aside), a non working partner and $20k worth of consumer debt and paying 20% of your income on the mortgage then you will be under far more stress than a single earning $150k, no other debt and paying 35.89% of their income in mortgage repayments.
With investment property its even more silly.
A investor with his own home paid off but paying 21% into investment property is a lot better off than a investor who pays 30% of his income into renting a roof over his own head and only tips 19% into the investment property.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
We commonly hear that you are under mortgage stress if you are paying more than 30% of your income towards your mortgage for your principle place of purchase.
I was wondering if there is a figure that exists for investors. EG if more than 20% of your income goes to paying the costs of your investment property you are under stress.
I know each persons circumstances are different and you are most likely under mortgage stress if your investment is costing you more than you can save, however, is there an industry figure for investors to go off?
Thanks!
The 30% figure is bullshit, it only ever existed as a guide for lending, it was never a hard rule.
Can someone on $25,000 per annum afford to commit 30% of their income and support a family - obviously not.
Can someone earning $200,000 per annum afford to commit more than 30% and still support a family - clearly yes.
The sooner people drop the ridiculous 30% myth the sooner they will understand their particular situation.
Any expressed market opinion is my own and is not to be taken as financial advice
I think it would be reasonable to conclude that it is against average incomes.
There are some people who seem angry and continuously look for conflict. Walk away, the battle they are fighting isn't with you, it's with themselves.
The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it. The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.
Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
I think it would be reasonable to conclude that it is against average incomes.
That's a pretty broad assumption, and one I've never seen anywhere else. It also invalidates using the 30% threshhold as 'mortgage stress', given average income for owners is higher than renters.
That's a pretty broad assumption, and one I've never seen anywhere else. It also invalidates using the 30% threshhold as 'mortgage stress', given average income for owners is higher than renters.
Well the OP is mortgage stress not rental stress.
The average income, if I recall from previous posts on mum and dad investors, is $80000
The average wage is around $67000, can't be bothered looking it up.
I think it is a broad assumption to assume it was originally intended as a flat figure against all income ranges. When clearly pointed out in this thread that makes it pointless. Comparing against the average income would apply more relevance to the 30% figure.
There are some people who seem angry and continuously look for conflict. Walk away, the battle they are fighting isn't with you, it's with themselves.
The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it. The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.
Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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