An Insightful Tip For Buying Your First Sydney Property
Sydney has done so well in recent times that it has become quite an effort to amass an upfront deposit for your first Sydney property. Sometimes, you may have to pay as much as $250,000 as a lump sum payment before your lender makes a mortgage agreement for you. There is, however, a smart strategy for accumulating this kind of capital.
Buy in a regional area for a start
Choose any regional area and purchase a property for something like $180,000 to $200,000. You will likely be asked for an upfront deposit of $40,000 at most. For most of us, that amount is manageable.
Calculating positive cash flow
Reducing outgoings (water rate, council rate and insurance) from rent and budgeting for depreciation and interest, you may face a cash loss of $390. Your tax benefit will be close to $600 and it will give you a post-tax benefit of $210. So this definitely makes for a positive cash flow result.
Lo and behold! upfront deposit for the Sydney property arranged
If you pay something like $360 a week, you will be able to offset the mortgage in ten years’ time. If your home shoots up in value from the $180k-200k price range you bought it at to about $250k, you will have all you need for the upfront payment of the Sydney property. Kudos!
Ponder over your mortgage liability
While choosing your mortgage, it is always wise to figure out your repayment capacity. For buyers (not investors) the best time to go for a loan is when they are close to their peak earning capacity. And it is crucial not to be overburdened by the mortgage liabilities at any stage.
This is a point well worth revisiting in present times when household debt has shot past the “plimsoll line”. If we actually face a situation of deflation (which is a global threat at the moment), the current ratio of income/household debt will see us running for cover because of our mortgage liabilities.