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Entering the market: small mortgage and pay off fast?; Interested in first home buyer entry into the market
Topic Started: 25 Sep 2013, 12:48 AM (1,679 Views)
l2oBiN
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I am looking to finally move into my own place. Have some savings and am thinking rather than getting a big loan with minimal repayment over a 30 year period to try and go cheap and get something I could pay off in 5 years time then think of my options. Do you think this strategy is sound? I woukd abviously be paying less interest on the loan but woukd this be beneficial as much as the capital gain on the bigger property?
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miw
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l2oBiN
25 Sep 2013, 12:48 AM
I am looking to finally move into my own place. Have some savings and am thinking rather than getting a big loan with minimal repayment over a 30 year period to try and go cheap and get something I could pay off in 5 years time then think of my options. Do you think this strategy is sound? I woukd abviously be paying less interest on the loan but woukd this be beneficial as much as the capital gain on the bigger property?
To my mind, the place you live in represents consumption, not investment. Why? Because the more it is worth the more it will cost you.

Personally I'd be following your strategy of buying the cheapest place I thought I could reasonably live in and freeing other resources for investment or consumption elsewhere.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Black Panther
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l2oBiN
25 Sep 2013, 12:48 AM
I am looking to finally move into my own place. Have some savings and am thinking rather than getting a big loan with minimal repayment over a 30 year period to try and go cheap and get something I could pay off in 5 years time then think of my options. Do you think this strategy is sound? I woukd abviously be paying less interest on the loan but woukd this be beneficial as much as the capital gain on the bigger property?
It is the ONLY way to start.
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stinkbug
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miw
25 Sep 2013, 10:13 AM
To my mind, the place you live in represents consumption, not investment. Why? Because the more it is worth the more it will cost you.

Personally I'd be following your strategy of buying the cheapest place I thought I could reasonably live in and freeing other resources for investment or consumption elsewhere.
+1 to this. Start small, you can always upgrade later.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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herbie
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Kudos to the bulls on this one. I was actually expecting you dudes to recommend loading up on as much debt as possible?

Anyway, yes, I concur - Start small and smash the debt ASAP - Play safe.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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stinkbug
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herbie
25 Sep 2013, 11:11 AM
Kudos to the bulls on this one. I was actually expecting you dudes to recommend loading up on as much debt as possible?

Anyway, yes, I concur - Start small and smash the debt ASAP - Play safe.
There's plenty of time in the future for investing once you've got some money in your pocket and assets to use.

I'd always recommend taking a small bite while you learn to chew.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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barns
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l2oBiN
25 Sep 2013, 12:48 AM
I am looking to finally move into my own place. Have some savings and am thinking rather than getting a big loan with minimal repayment over a 30 year period to try and go cheap and get something I could pay off in 5 years time then think of my options. Do you think this strategy is sound? I woukd abviously be paying less interest on the loan but woukd this be beneficial as much as the capital gain on the bigger property?
I see the nervous nellies have said start small.

Sensible but it depends on your circumstances:

Do you do a job that has good potential for decent pay rises over the next 5 years?
Do you have a wife/husband that works and has a job that has good potential for decent pay rises over the next 5 years?

If the answer to either of these is yes, you should consider spending more now as upgrading is expensive (stamp duty, agents fees, conveyancing and physically moving (movers, utility reconnection etc). If you can buy a home that will do you for 15 years and can get a decent wage ramp-up you will do better than upgrading 1 or 2 times.

Having said all that, my first home was a starter house and it's good to get used to having a big scary mortgage and drilling holes in walls before buying a more longer term home. I'm not sure I'd do it differently if I was to do it again.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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Pig Iron
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Bogan scum

herbie
25 Sep 2013, 11:11 AM
Kudos to the bulls on this one. I was actually expecting you dudes to recommend loading up on as much debt as possible?

Anyway, yes, I concur - Start small and smash the debt ASAP - Play safe.
no one on here ever recommends that course of action.

the only ones spouting about it are the bears strangely enough.
I am the love child of Tony Abbott and Pauline Hanson
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newjez
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By start small - what do you mean exactly? I would go for the greatest block value. Generally the closer to the city the better. A cheap new build on the outskirts won't increase that well. You would be better to spend a bit more and buy a shack on a decent piece of land that can be re developed at a later date. It's a bit more complicated than how much you spend. It's more about the quality and potential of what you are buying. Also depends a lot of what skills you have.
Edited by newjez, 25 Sep 2013, 04:08 PM.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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herbie
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Pig Iron
25 Sep 2013, 04:00 PM
no one on here ever recommends that course of action.

the only ones spouting about it are the bears strangely enough.
Shadow 'n Mike both sound like they are lovers of debt to me Pig Iron? 'Course I could be wrong. And am absolutely certain they'll take lots of pleasure in telling me so if I am ... :re:

But anyway, yep, Newjez makes good points.
Edited by herbie, 25 Sep 2013, 04:19 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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