Glaring Mortgage Statistic Revealed
Michael Yardney writes a scathing piece on the present mortgage situation in Australia for his website Property Update. He begins with the powerful statement, ”buying a home worth $611,000 will set you back by $1 million over the life of your mortgage”. This, put in another way, means that homes today come with at least a million-dollar price tag.
A glaring mortgage statistic
Research is quite unequivocal on the subject. If you employ a loan with a 5.5% variable interest rate, a property bought for $611,625 with an upfront fee of 20% will set you back by a million dollars by the time the 30-year tenure is completed.
If the present offers a good deal, who cares for the future?
It is human nature not to look too far into the future if things look good for the present and immediate future, which is probably the biggest reason credit cards became such an integral part of our existence. When people borrow, they think about the existing interest rates and hardly focus on what they may end up spending over the entire tenure of the loan.
If your upfront cost is meager, asserts Yardney, and you do not shop well for your deal, the capital growth of your home over the course of 30 years will be near nullified by the cost you have to pay for it over the same duration.
Stats for Sydney even more bizarre
For Sydney, the projected median house prices are such that come the 11th year, borrowers will hit the $1 million mark that we discussed earlier. Now, another thing of note is the variable interest rate you are being offered by the lender. The research talks about a 5.5% interest rate wherein what the lender offers might turn out to be far higher, if you are not circumspect while selecting.
Michael could not have been clearer in sounding the warning bells. In this pursuit, one of our recently published articles about various home loans that you can benefit from might help you. All said, in my opinion, it is all the more important to get a good price on your home, since the savings are actually compounded.