Mortgage payments - Weekly, Fortnightly or Monthly

irukandjisting · Post by **irukandjisting** » Sun Oct 21, 2012 4:06 am

Just looking in Money section of the daily Sydney, Australia, newspaper -
David Koch, Financial Advisor is writing about paying your mortgage on a weekly, fortnightly or monthly basis
Based on a 6.23% variable Home Loan - 300k over 30 years -
You will save $94,444 if you pay your loan weekly

You will save $92,904 if you pay your loan fortnightly

You will save $0 if you pay monthly
Interesting..

C40 · Post by **C40** » Sun Oct 21, 2012 5:11 am

And -- you will 'save' $363,570 if you buy it without a mortgage.
Or if you buy a $100,000 house with cash instead of $300,000 with a 30 year mortgage, you'd 'save' over half a million! wow

fraussie · Post by **fraussie** » Sun Oct 21, 2012 7:42 am

Good luck finding a $100,000 house in Australia....

DutchGirl · Post by **DutchGirl** » Sun Oct 21, 2012 8:29 am

Since I get paid once a month, I believe my best strategy would still be to pay the mortgage right after getting paid. Sitting on 3/4th of the mortgage money for the next three weeks is only going to cost me interest. I believe the idea with debts with interest rates is "pay as soon as you can pay". I guess that means that someone who gets paid weekly indeed should also pay weekly.

irukandjisting · Post by **irukandjisting** » Sun Oct 21, 2012 8:40 am

aint that the truth fraussie!! lol...
Just checked my home town - the cheapest - a 1 bedroom simple unit share laundry 92k - and the cheapest house was 220k - hundreds of ks north of Sydney
Out west in the nulla nulla you would get something under 100k
85% of Aussies live within 50ks of the coast
Sydney now is the 2nd most expensive city in the world to live I read this week - ohhhh, but what a city !!!

J_ · Post by J_ » Sun Oct 21, 2012 2:03 pm

My mortgage history after living successively in two rented appartments:

first house: 80 % mortgage, second house 75% mortgage, third house 25% mortgage, fourth to eighth house paid in cash.
So I have kind of practised moving house (timespan 39 years) but more important here: the banks have not much earned on my housing.
What C40 writes is so true.

secretwealth · Post by **secretwealth** » Sun Oct 21, 2012 3:28 pm

If I got a 100,000 apartment in NYC, I'm sure you can get one somewhere in Australia.
I'm with C40: Mortgages are huge liabilities and are best left avoided, unless you use it as an effective margin on an investment account and you can consistently earn 3%+ over the S&P 500 or PP yield consistently every year for the length of your mortgage.
And if you can do that, can you PM me stock tips?

aussierogue · Post by **aussierogue** » Sun Oct 21, 2012 10:27 pm

the only places you cld buy a 100k apartment in australia would be rural or in a really crappy suburb al long way (30 mile) from the cbd.
Per sq feet melbourne and sydney prices are the highest or close enuf in the world.
medium house price in sydney is usd 680k
an average to crap house is 500k

dragoncar · Post by **dragoncar** » Mon Oct 22, 2012 1:17 am

You don't need to earn 3%+ OVER the S&P500 or PP to have a mortgage make sense. With 5/1 rates around 2.8%, you just have to beat inflation. Factor in mortgage deductions, and I'd take a mortgage fo sho.
Remember, the comparison is between paying in cash or taking a mortgage and investing the cash. If you don't have the cash to begin with, that's a different story.

noskich · Post by **noskich** » Mon Oct 22, 2012 2:18 am

Other than gold and silver real estate was the best investment you could make in Australia during the decade 2000/10.

Regularly people would gain capital profit over 100% on real estate in 3-4 years or more. It has also been an effective tax minimisation tool as you could claim back cost on fixing, maintenance and most importantly interest rates on the bank loan.

Effectively that would mean that if I pay for example 30K tax annually, I could buy an 300K apartment with a 30K deposit, get the money back for all interest payments and fixes and make some profit on the rental return which would be around 15-25K annually (before tax).

That`s what has brought the property prices up to outrageous levels of today.

Unfortunately this strategy would not be advisible now as the prices have reached record levels and will probably keep going down.