Does the thought of a thirty year mortgage sound daunting?
Consider this in 2006 the median rent in Perth was just $180 per week. As of the March 2015 quarter, the median rent hit $450 per week! This represents an annual increase of just over 10.00% per year. If the current trend continues, then we can expect the median rent in Perth to be around $1200 per week in just 10 years or $3000 per week in twenty years. So how does this compare with a thirty year mortgage?
Let’s do the sums. Although interest rates have never been lower, there is no denying that they will rise and fall again and again over the term of a typical mortgage – they always do. However, rents traditionally only go one way and that’s up. For an example, let’s assume that someone is paying the median rent ($450 per week) and that the rent is increased by a modest 5.00% increase per year for the next thirty years. This would equate to a massive $1,554,000 in total rent payments and they still have to keep renting, and still won’t have an asset. However, if the same person buys their own home and makes the minimum monthly payments, they will be mortgage free in the same period of time and based on a conservative 5.00% growth, will have an asset worth approximately $1,700,000. Sound too good to be true? Do the sums yourself and do some research on the REIWA and Australian Bureau of Statistics websites and you’ll be surprised. To find out how you can start your home ownership journey with just $1 down, call one of our new home consultants on 9201 8550 or visit them at any of our Goodlife display homes.