To Dream of a Dream Home

Recently, Raquel and I were thinking of getting a house of our own. Rather than paying monthly rent for a home that will never be ours, we could be paying for monthly repayments on a home loan for a house that is truly ours.

Then, we’ve read Ka Uro’s post regarding the economics of renting vs owning a house and that made us more adamant about owning our own house some time real soon. Even though we’re paying for repayments that would be costing us more than rent payments each month, at least at the end of, say, 30 years, we’d have a house that is totally ours rather than have extra cash with no house.

Let me just quote Ka Uro on this point:

Para mas madali ang pag-kumpara ng renting versus owning, isipin mo na lang na naglalabas ka ng $395.94 kada linggo. Kung nag-rerent ka ng $270 per week, ang $395.94 minus $270 ay $125.94. Eto ang savings mo kada linggo. Multiply mo ng 52 weeks at 20 years, you get $130,977 after 20 years. May pera ka, pero wala ka pa ring bahay. Yan ang take home money mo sa Pinas after 20 years. At kahit lagyan mo pa ng interest ito, hindi ito aabot ng 200k.

Eto naman kung binili mo ang bahay. Nagbabayad ka ng $395.94 kada linggo. Wala kang savings per week. After 20 years, wala ka ngang pera, PERO, may bahay ka. Magkakaroon ka lang ng pera kung ibebenta mo ang bahay. Ang halaga ng bahay after 20 years, hindi lang magiging doble, kung minsan triple o higit pa. Sa doble na lang: 2 x $210,000, e di $420,000 ang pera mo, at taymis 40 na lang = P16.8 MILLION PESOSES ang iuuwi mo sa Pinas!

Conclusion: You’ll be better off buying a house than renting in the long term.

It all seems like getting a house is the best thing to do.

Raquel and I started our research on buying houses in Australia in general and Melbourne in particular. But, as we recently found out, it’s not that easy as we’d hope.

We found Your Mortgage Magazine’s Website and in there are informative articles for Australian home buyers such as the 12 Steps to Home Ownership.

Another great source of information for us regarding owning a house in Australia was the thread titled Best Way to Buy a House in Philippines.com.au.

The first hurdle we now face as home buyers is the lack of cash. See, it’s typical for lending institutions to require a minimum of 10% downpayment of the cost of the house. Originally, we thought of getting a house that costs around $350k. So this would mean that we need a deposit of at least $35k. This amount excludes any taxes, stamp duties and fees. Where would we get $35k? We didn’t even have enough money to buy a $26k Toyota Corolla last year.

I then went to our bank’s website and decided to use St George Bank’s Home Loan calculator to get a more accurate idea of how much we would be able to borrow given our current financial situation.

Assumptions Max Borrow Amt Max Monthly
Repayment
No dependants, 10 years $312,501.00 $3,831.90
No dependants, 20 years $450,001.00 $3,827.49
No dependants, 25 years $487,501.00 $3,834.73
1 dependant, 10 years $290,626.00 $3,564.02
1 dependant, 20 years $418,751.00 $3,562.04
1 dependant, 25 years $453,126.00 $3,564.68
2 dependants, 10 years $268,751.00 $3,296.14
2 dependants, 20 years $387,501.00 $3,296.59
2 dependants, 25 years $418,751.00 $3,294.64

Just to give for everybody some context regarding the montly repayments, we currently pay approximately $1,000 monthly for our rent in a cramped 2 bedroom apartment near the city. Granted that paying $3k every month on a house of our own that will be much better than our current apartment is fair, setting aside $3k every month for 20 or so years would mean sacrifices on our part.

We probably won’t be able to afford to go on holidays abroad, including return trips to our home country. We should not eat out if possible. We should buy only the absolute necessities when shopping. And probably, we should wait a bit more before trying for a baby. I don’t know. These are things we still have to figure out later.

So, after determining what is the potential maximum amount we can borrow from one of the banks (namely St George), we then searched RealEstate.com.au for three bedroom houses around Melbourne that fits the price range we decided: $250k or less. Most of the houses that fit our criteria were a bit far from the city like maybe 45 minutes away by train and longer by car.

This weekend, we’d try driving by the different suburbs around Melbourne to see for ourselves which area would appeal to us. Like, is there a rail station nearby? Is there a nearby shopping centre, church or school? Does the neighborhood look safe?

Anyway, there’s time. It’s not like we’d be able to buy a house tomorrow if we feel like it. We don’t have the money yet for downpayment on a home loan. We’ll save for that first then maybe we can actually start applying for loans next year. Then, we can actually hunt for houses.

Until then, we’ll just have to make do with dreaming about our dream home.

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Published in: on March 23, 2005 at 1:54 pm  Leave a Comment  

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