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Sep 11

Imagine life without a mortgage

I remember lying in bed next to my wife on the first night in our first property. I’d just signed the mortgage on a beautiful 2 bedroom apartment on Sydney’s Northern Beaches. I felt like the luckiest man in the world……but I also couldn’t shake the feeling that I’d just signed my soul to the devil. After all, isn’t that how Australians typically view their mortgage? A ‘necessary evil’ for most if you want to live in, and hopefully own your very own piece of the ‘great Australian dream’?

But have you ever imagined what life would be like without a mortgage?

Your first thought might be ‘freedom’, or ‘more disposable income’. But it could also be ‘insecurity’, ‘uncertainty’, or ‘lack of control’.

I am great friends with a lovely married couple who were not in a position to buy their own home. Because of this, I watched them have to move from one rental property to another over recent years – not because they are bad tenants – in fact you couldn’t find a better couple to rent your home. However, they have no control over where they live long term. They have had landlord after landlord who’s financial plans have changed, and they have had to move time and time again.

The first two times it happened, I thought it was bad luck. After the fifth time, the penny was dropping for all of us that this was not a way to live. And when my friends weren’t being evicted, they were often facing rental increases, often unreasonable ones. I remember my friend saying at a BBQ once that she was almost scared to go to the letterbox every day, because she never knew when the next eviction notice or rental increase was coming.

It was hard enough to find a suitable property, location, and price when it was just the two of them, but it became even more difficult once they had two beautiful daughters. As my friends said, “we don’t just have to accommodate us anymore, we also have to rely on finding a home close to our children’s school and childcare, their friends and their social network now”. With Sydney’s increasingly tightening rental market, this has become more difficult on each occasion.

So the next time you curse your mortgage, or feel nervous about the prospect of taking on a mortgage for the first time, consider the true story above. Whilst a mortgage may have it’s own little collection of emotions attached to it, one thing can be said for owning your own home – it gives you complete control over how much you spend on your property, where you choose to live, and when you decide to leave your home and move onto your next one – not to mention the equity that you can build in your own property to purchase your next home or an investment property.

The trick is to speak to a professional mortgage broker to ensure that you structure your home loan in a clever way to exactly meet your individual needs.

And don’t make the common mistake that many home owners make. That is, to choose a home loan that is right for you today, and then never revisit it again. In today’s world of consumer choice and flexibility, there are new and more flexible loan products coming onto the market all the time. Lenders are recognising now more than ever that customer’s needs change over time and over the life cycle, and have matched this need for flexibility with gusto! There are many loans to suit every customer circumstance now and into the future – the key is to capitalise on this, and revisit your home loan at least every one to two years.

Incidentally, there is a happy ending to my friends’ story. They recently did buy their own home after renting for many years, and they couldn’t be happier. At last they have found the security and control they have so desperately wanted. And it is so lovely to see them making positive changes to their own home and garden every weekend now, knowing they are there for the long term.

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