I have found myself in, what some would call a pickle, and what I would call a huge muck up of a financial situation. So you see, I got myself a mortgage and with it a whole bunch of problems.
Problem #1: 100% Home Loan
I fell into a trap of believing every word that came out of a mortgage brokers mouth. They got me; hook, line and sinker. I’m in up to my neck and I honestly have no clue on where to go from here. I suppose you want to know the story, well…
My partner, Sean, went for the old win $5k towards your house of your dream, with a company specifically for first home buyers (I won’t name and shame). We were then contacted by a lovely mortgage broker, whom promised us the world and for a great price, and with the way the housing market was looking 2 years ago in Perth, Western Australia, we thought “oh why not?” We were given old reporting on our area’s house prices that we were about to be building in and seeming as the house ‘only’ cost $405,000 that our house, upon completion would be worth something around the $420,000 mark.
Now, I don’t know how much you know about house prices in Perth, WA at the current time, but I can tell you that my house is currently worth at a maximum of $360,000… And with that stark reality, lets discuss my current mortgage… $373,000.
I’ll just let that sink in.
Ok. So, thoughts? I got absolutely rolled! But, I’ll tell you what I’ve learnt in my dealings with buying land and building on it. But, in the meantime, I will also let you know my other blunders that I have made in my incredibly interesting journey to the current day.
Problem #2: New Car purchased within First Year of Being a Homeowner
We didn’t set ourselves up for a good first year. I moved into the house with a 2006 Hyundai Getz, that I knew had issues with it and I still decided to make the biggest decision of my life! All whilst knowing that I would soon have to spend $10-15k on a new car that will last me a while.
The only positive is that Sean and I earn enough that we could cover all of our minimum repayments on things, plus a little extra to knuckle them down. If we didn’t have this we would have been (as the saying goes) “Up shit creek without a paddle”.
Problem #3: Taking out a Personal Loan to Complete Back Garden
Let’s not talk too much about this one, however $30,000 personal loan over 5 years = not the best decision for ourselves at the time.
Now for the good part;
The Solution:
Unfortunately getting into debt takes about a week with some signatures. Getting out of debt requires some planning, determination, hard work and understanding.
Listen, in this scenario, my expenses are a little different to the average Joe’s. Full disclosure; I work for a bank and I get lower interest rates on personal loans. So, in essence, my home loan interest rate is higher than my personal loan interest. Here is what I am planning to do:
Pay out the smaller Personal Loan first – There is only $6,000 left owing on my personal loan and that shouldn’t take too many fortnights pay for it to be gotten rid of to then free up some more of my funds. Because, both Sean and myself are on good wages, we plan to smash down $1,000/fortnight onto this personal loan in order to get rid of it.
Next, I will pay down my home loan – I am paying the most interest on the biggest loan that I have. I will take the repayments that I was making into the smaller personal loan and add that on top of the minimum amount that I currently pay on my home loan. Meaning that I will be knocking off $2100/fortnight off the home loan. Huge, right? Then, as soon as my home loan is able to be refinanced, I’ll be taking out my home loan with the bank that I work for. Why? Because it is a lot easier to salary sacrifice into my home loan that way and ignore some of my student loans for a little bit longer.
Most likely, by the time I have finished paying down my home loan there will be less than $10k on my unsecured personal loan. In which case, I will then knuckle down and pay that off in full. At this time I am unsure of what exactly my repayments would be as this depends on a lot of ‘if’s’ and not very many certainties.
Aims and Aspirations 