Mortgage in Australia

HotCopper

OK, so I live in Australia, and despite what you may hear to the contrary, house prices here are absolutely insanely expensive. I've been following the boards, people with mortgages of 50k, or people who have recently bought houses for 150k..... that wouldn't even get you an apartment in this city.
So, we bought our house 7 years ago for $665k, about £410k with a mortgage of £318k. When I read about people putting an extra 50 quid off their mortgage I just think when mine is sooooo huge it won't make any difference. Anyway, to cut a long story short, we made some very bad investments in a company, and spent quite a bit of money flying around the world to show off our new babies to various families (I am English and my husband is Australian)... and 7 years later we owe £287k ....
So, I am working full time, and all my salary goes to paying off the mortgage. My son is at full time daycare which costs £936 per month. He starts school in February, when I will continue to pay that money, but towards the mortgage instead.

My aim is to be mortgage free by 2017....
It will be hard work, even though my husband and I have professional jobs, the cost of living is pretty high in Melbourne, and we do not live an extravagent lifestyle at all. We camp for holidays, I save up cash in tins for Christmas, and we shop at the equivalent of Tesco's for our clothes. However, we do have a nice lifestyle, and are very happy here. I have £16k in 4 speccy shares on the ASX which I hope will multiply many times over.

This is my story.

SmlSave

Welcome to MFW HotCopper

abouttimetoo

Welcome to the board Hotcopper and well done for getting your mortgage down to where it is now.

There are plenty of people on here with mortgages bigger than yours is now or more than where you started so don't let the size make you feel despondent and also don't forget it's all relative to the financial circumstances involved.

Have you played with any of the mortgage calculators? They are quite an eye-opener. You haven't mentioned what your interest rate is or how long you have left on your term but I ran an example through a calculator to show you the difference that £50 extra a month can make on a £450k mortgage at 5% over 25 years; the impact would be

• interest saved £14,284
• repaid 11 months sooner than planned without overpayments

Have a play with one of the calulators based on where your mortgage is now.

Good luck with your plans

golfiematt

just wanted to wish you the best of luck with your challenge. and btw im so jelous that you live in oz as i would love to live there but by the sounds of it, its too expensive!

Aless

One of my friends has just brought a house in Australia and I was shocked at how expensive it was (though the exchange rate is bad at the moment) so I understand what you are saying.

I have a large mortgage so I know where you are coming from and how hard it can feel that little payments make any difference. But I think you just have to forget about that and think that anything is better than nothing and it is surprising how quickly it all adds up. I never make a payment less than £100 because it feels point less but that is not necessarily a strategy I would recommend!

Good luck!

liuhut

Hi HotCopper, I'm in Melb too!! We are bayside, we rent down here but we own a house in the UK that we rent out - I have been op'ing on that one but trying to decide if we should stop and save for a deposit to buy here...not sure if the house prices can continue to go up like they have been...
Just to say welcome to the MFW and good luck with your journey!
L x

HotCopper

Well, I think it has been about a year since I posted, and it has been a busy year. The biggest change in the year is that my husband is totally on board with paying the mortgage down. Previously he had never been bothered and spent all his time talking about upsizing, or taking on more debt for investments, which I was never happy to do. I have to say it has made an ENORMOUS difference with us both being focussed.
My son started school in February, and I have adjusted our mortgae payments so we pay 4,100 per fortnight. We have renovated our house this year. House prices have dropped off, and we thought if we had this house ready for sale then if a bigger bargain came on the market we would be ready to take it. Having said that renovating on the cheap whilst both working full time is bit of a slog. My husband and I did everything ourselves which saved a fortune as tradies charge a fortune over here. I am in no mind to do it all again, so envisage we will stay put at least until the mortgage is paid.
My husband did a development (bought some land, subdivided, built 2 houses) which earnt us some money. We have put that into an investment which slumped about 20% the day after we bought (nice timing!)- but am confident it will rise over the next two years. My speccy shares have gone up from 17k to 32k, which is pretty good in the current market, and obviously they could crash at any moment with the global situation, but I am pretty confident of the long term fundamentals of the companies I have chosen.
So, at 408k today my husband gets a 9k tax return, should get a 10k bonus, and will sell 14k of company shares. This should bring our mortgage down to 375k in the next few weeks.
The aim is to leave our investments to grow (fingers crossed) but reassess and sell at the end of next year hopefully bringing the mortgage down to approx 200k, which after that should take about 2 years to pay off.
So aim is to have mortgage paid by end of 2014 (3 years earlier then previous prediction).
So that's all the big macro stuff.
On a micro level, I have been made a people manager at work which means I get my parking paid for in the city. So, I have been driving my husband in and picking him up. Parking was approx 15 dollars per day each (so 30 a day times 20 days per month) is a saving of 600 dollars per month, plus the fuel saved in my husbands car. That has made a difference. Also, we take our own lunches to work every day, as to buy a sandwich costs approx 10 dollars - and this too, has made a big difference.
My husband has embraced Aldi, and we do most of our store cupboard shopping there, though I still buy meat and veg from butchers and greengrocers.
That's really as much as I can do, as my husband gets very narky if he thinks I am penny pinching, so to keep him on board with the game plan, I have to give a little the other way and not be too tight.
Thanks for reading:)

taxi73

all sounding very positive..well done

Twiddy

Hi HotCopper

Good to hear that a year down the line you're still very much on-board the MFW train. Will it be another year before we hear a anything from you, as we're all watching with interest to see how you get on?!!

All the best
T

HotCopper

Thanks for the encouragement guys!
I'm trying to think of all the things that have made a difference.
My husband rang up our mortgage bank yesterday and has renegotiated our mortgages (we kept one of the properties we built as an investment)down from 7.5% to 6.65% (yes, rates are very high over here!) which should make a difference, and renegotiated the fee from $500 to $250 which was good.
I took a look at our private healthcare plan (you have to take it here else the taxman slugs you another 1%, so you may as well) and found out I was paying $70 a month for private cover for having a baby. Seeing as I am over 40 and every other time I've had a child I've pretty much just rocked up at the hospital on the due day and said 'oh, I suppose I'd better register' and then been happy with whoever was on duty, it seemed a bit mental to be paying for that. So I changed the cover to remove it. On the outside offchance I do get preggers I'll just go in the public system.
I also showed my husband the amount of times in the past that we have taken money from the mortgage offset account to 'pay off the visa in full' - only to see another similar entry 6 or 8 months later. His logic was always that it's cheaper to put the debt on the mortgage (which is IS), but my logic has always been then you don't think you are in debt and just rack it back up again (which he has always done).
So, at the moment we have 12k debt on a credit card (from annual holiday) and I have convinced hubby that instead of using the tax return, or the bonus or the share sale to pay it down, we just need to go a bit tighter and pay it off over the next 4 months. Today I got paid and we both got less spending money this month, and I paid 3k off the credit card.
Just as an aside, we sold one of the houses my hubby built (he went halvies with his Dad) to my hubbys younger brother who is 28. It is very hard for young people to get on the housing ladder here as prices are so high. We sold it to him at very good price (for him) to help him out. So, we didn't make as much money out of the development as we could have, but family first right? Well, he has spent his first home buyers grant on furnishing it all with brand new stuff, spends all his money on going out and new clothes, while his diligent girlfriend has been saving to go travelling. So now they both want to go travelling, so younger brother is selling the house, pocketing about 60k, and spending it all going travelling. So, we may as well have just written a cheque for 60k and given it to him. My husband is a wonderful, generous man, who married me and had a child at 28. He has done nothing but work, and study, and try to get ahead since then. Never asked or taken a penny off anyone. He's disappointed obviously. So there you go, take from that little tale what you will - the pitfalls of working/helping family - Gen Y - whatever!
Thanks for reading!

HotCopper

Hi,
Trying to stay motivated but just did the banking and saw my husbands credit card at $850 when I paid it off in full 6 weeks ago. There's nothing on there other than bits and bobs - no major bills etc
We have a cash system whereby at the beginning of the week we take out our spending money, and don't use our cash cards or credit cards as you lose track. My DH can't seem to adhere to this. I get awfully frustrated when he says he is on board with MFW, but then I constantly battle his NON accounting. And the irony is that HE is an accountant! I know I shouldn't whinge as he is a fantastic husband, but sometimes it gets to me.
I guess I'm frustrated too that every month I seem to get a massive unexpected bill which is making paying off out $14k credit card that much harder. My daughter had a spider vein on her chest which was starting to spread, so I took her to the doctor to get it zapped. It cost me $79 for the initial referral. The next specialist who saw it took a 3 second glance at it to confirm that the other chap in his practice was the zapper man, and charged me $100 to refer me. Then she got it zapped, which took all of about 5 seconds. I know some of you may laugh but I never enquired about the price as it just never occured to me that a 5 second zap with a laser would cost FOUR HUNDRED DOLLARS! So, all up, $570 dollars. I'm getting my leg done too. It has deeper vein issues - I was in a car crash when pregnant about ten years ago, and the impact damaged a load of veins on my leg, leaving permanent damage. Goodness knows how much that will cost. Maybe I'm just feeling a little under pressure at the moment. Venting, sorry!