Questions from a mortgage newbie


I'm Australian, but I have been on MSE for years, mostly lurking around the DFW board. DFW helped me clear my debt and once we realised that we were paying $270 a week to rent and that a mortgage on the same sized place would be $269 a week... well, it seemed silly not to buy. So now we've bought a little 2 bedroom unit and been in it for a month, and I need a bit of guidance.

We'd like to start overpaying the mortgage, but I'm working on building an emergency fund first. How much money should I set aside in an emergency fund? We have no credit cards anymore, so this is it for our safety net. After January my hours at work are being reduced. We can live on my husband's wage, but it would be tight. We get Family Tax Benefit (we have 2 kids) but we get it as a lump sum at the end of the tax year as we were just frittering it away if we got it fortnightly. Our plan is to use some of the FTB lump sum to pay rates, insurance and strata. We'll still have about $5k of FTB left after these costs (which we'll put on the mortgage).

The other thing is that in years to come, as the kids get older (currently 8 months and 2.5 years) we'll most likely need to move to a bigger place. In this case, is overpaying on the current mortgage still the smartest thing to do?

Thanks in advance :D
Away with the speed of a thousand turtles!


  • HappyMJHappyMJ Forumite
    21.1K Posts
    I would have 6 months worth of expenses saved up. You can use credit if needed and benefits can supplement it if you need a lower figure but 6 months is about right. Most people can find work within 6 months.
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
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