Obsessed with owning a home

Well, sorry for the lack of posts folks, but my first two weeks at work have been crazier than expected. I’ve really enjoyed it though and have accumulated a few hours of overtime each week, so there might be a little extra in my pay this week.

Today, however I am home for Australia Day! A public holiday is a nice chance to relax with my son and enjoy life in this fantastic country, though hubby is working as usual. For once though, the sky is cloudy and its’s not beach weather. I guess it might be a good day to relax in bed (so why am I online 🙂 ).

One thing I haven’t kept you updated on over the last few weeks is my yoyoing plans for the future. I am so desperate to own our own little patch of dirt, and this does not fit with our long-term plan, which is to save 20% deposit first. Part of the reason for my feelings of desire is that mid-year, the first home owners grant drops from $14K to $7K. I don’t want to miss out on that extra cash, but I also recognise that staying here long-term would make that extra $7K pale into insignificance.

We are still living in my father-in-law’s house and things are comfortable. However, there are two problems. One is that we are very much entertainers, and it is next to impossible to do that in any relaxed fashion with my FIL around. I don’t mean to sound ungrateful at the amazing opportunity living here has provided us financially. It has helped us pay off our debt and get ourselves together while I finished study.

But there is a price. There is a tremendous amount of care and worry involved, and sometimes that is hard. It is also hard to have friends around when an 80-year-old joins you at the table every time to dominate the conversation with gruesome tales of death from WWII. I do like hearing these stories and value his sacrifice, but perhaps not when my friends are visiting for a casual coffee and girly chat. Is that wrong? For eight years I have studied almost every weekend and we have had little or no money, so I feel it’s time to return to a social life.

The other problem is that I feel this deep-seated desire to set down roots and own something that is ours. I want to raise our child in a house that I love, one that I might look back on fondly. I can’t explain my desire to do this, but it feels almost as strong as the nesting instinct I experienced during pregnancy. Australians apparently have one of the highest rates of home ownership in the world, and owning a home is very closely tied with our self worth, so that could be part of it too.

All this means that I can’t help myself but scour the real estate guide each Saturday, even driving past houses I like. This, despite the fact we don’t yet have any real down payment.

On the plus side, we can probably accumulate close to $15K by the end of May, and between this and the $14K grant, we could be very close to a reasonable deposit. But I just can’t make myself settle on whether it is better to wait, save for longer, or just go with my heart and buy by mid-year. Repayments aren’t the problem, just trying to make financial sense. The global economic outlook should be good from my perspective, but it makes me even more confused because everyone keeps telling me houses will be worth even less in a year, so I should hold off! May be I should close my ears and just stop listening!

Let me know what you think. Should we wait and save more, or buy before July and claim a bigger grant? Some further info: a house would probably be in the $350K range (remember: Aussie dollars) and we could easily make the repayments, plus continue to put $200/wk towards our emergency fund. By June, our efund would have about $5K, and be more like $10K by the end of the year. The $29K we would have (the grant + deposit savings) would need to cover moving and buying costs, so I figure we would have about a 7% deposit. We should have adequate money in our billpaying account to cover insurances and annual rates.

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6 Comments »

  1. Why can’t you just rent something cheap for now? Entertaining a in cheap apartment might even be more fun.

    If 7K makes the difference in whether you can buy, you won’t be able to handle the air going out or all the other things that will go wrong the second you move in.

  2. Uncster said

    Go for the 20% deposit – 2009 is not like 2001 – house prices will drop while you save, honestly it will be like you are saving at twice the rate.

    Good luck either way!

  3. debtdieter said

    It’s an interesting one, I wouldn’t worry about the extra $7K the government is offering, you’re not leaving it on the table if you don’t get it.

    Housing prices are still on the decline, and buying before June 30 when the market could drop another 10-20% could see you with negative equity for the first few years anyway? Better to negotiate hard and save the $7K there instead.

    I’d also consider how stable your jobs are expected to be over the next 12-18 months, there would be nothing worse than sinking your money into something and then find yourselves not able to make the payments due a job loss.

  4. debtfretter said

    thanks for the feedback, guys. You have inspired me to try to keep on the wagon! Maybe I need to stop getting the paper on Saturdays!

  5. Evjam said

    Don’t under estimate the legal costs of buying a house. The stamp duty on a 350K house would be around 20K. There are also conveyancing costs – variable depending on the property- expect at least 1K to be safe (it could be higher too). There are plently of mortgage products about at the moment, so talking to a mortgage broker (or two) would help with how much you can borrow, the repayments, how much deposit you need, etc. Do you want a basic home loan, redraw faculity, offset mortgage.
    Having said all that, buying our own place has been one of the greatest achievements we have ever done. No more renting (Yuk)- no more house inspections, no more asking can I put a picture hook into the wall so I can hang a picture – no more living with the 70’s brown circle wallpaper.
    Save as big a deposit as you can, then go for it.

  6. debtfretter said

    Thanks evjam, you raise a lot of really good points.
    One benefit is that there is no stamp duty for first-home buyers in our state when buying homes valued under $500K, so we haven’t had to factor in stamp duty costs. But one other factor if we don’t have a 20% deposit is lenders mortgage insurance, which would probably be $5K.
    I know in my head that waiting is important but sometimes it is so hard to be good!
    And debtdieter’s point about job security is also important, though I work in health and my husband in government so we should be OK.

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