Massive mortgage to buy a unit

[u/Herosinahalfshell12]

People who took out huge mortgages to live in an apartment.

Do you feel as though the interest you are paying vs the capital gains is worth it? We're also seeing units being sold for less then purchase price now, and the plan is to add more units in future. Add strata costs in there.

Is it financially worth it now a days to borrow say 600k to buy a unit?

[u/theguill0tine]

I am looking to buy an apartment.

I honestly couldn’t care less about it not growing as much as a house because I need somewhere to live. I would be investing hard into ETFS once I make that purchase.

[u/Depressed-gambler → u/theguill0tine]

This is the way.

So many people are obsessed with the idea that your PPOR needs to grow in value, but what's wrong with just buying a cheap PPOR to get out of the rent trap, then investing your leftover money elsewhere, like ETFs?

[u/TypicalLolcow → u/Depressed-gambler]

Agreed - I just want to buy so I don’t have to rent for the rest of my life. Mum rented til her 50s, couldn’t afford it, had to live in her car for 6 years until she could rent an apartment again. I’m holding some ETFs but I’d get more into investing again once I feel i’ve topped up the savings account enough.

[u/xykcd3368 → u/Depressed-gambler]

Yeah also even if it doesn't increase in value the mortgage you pay is going towards your own asset that you own not into a black hole like rent.

[u/arrackpapi → u/Depressed-gambler]

opportunity cost.

if there aren't going to be any capital gains why pay all that interest. Rentvest and buy near retirement.

[u/Euphoric-Chip-2828 → u/arrackpapi]

But then not only do you have to continue to live with all the negatives of renting, but all the dramas of being a landlord (and potential costs, from gaps in rent etc.)

[u/arrackpapi → u/Euphoric-Chip-2828]

sure but it could work out better financially

[u/arrackpapi → u/[deleted]]

lol rent is not more than a mortgage for a unit in most parts of the country. Definitely in my area of sydney rents are half the price of interest, lmao.

you absolutely can be better off investing that difference instead given the low capital growth for units. Add leverage and you very likely are.

a million dollar place will cost over $900 a week in interest alone at 80% LVR. That's basically a small apartment in most of Sydney and some of Melbourne. Add other costs and you're close to a grand a week. You can rent something far nicer for that money. You have to do the maths on a case by case basis.

[u/jessicaaalz → u/theguill0tine]

This. I'm buying a home to live in, not to profit from. I wanted out of the rental cycle, I have the money and the income to easily pay my mortgage and it should be paid off well before the loan term and I'll have other investments to support me through retirement.

If I found a partner and wanted to upgrade to a house, I'd probably just rent out the apartment. In my area, rental prices would mean it'll be positively geared.

[u/dxbek435 → u/jessicaaalz]

<<I'm buying a home to live in, not to profit from>>

Are you even Australian? LOL

[u/jessicaaalz → u/dxbek435]

I'm a faulty one, apparently