The Power of the Ring…
Well this is going to be one of those controversial stories, so I am apologising in advance. Nah actually, no I’m not…
What is it with a ring? I mean how it causes such a change… I am confused…
And.. It happens too often for me not to Blog about… what’s the go? When a woman gets a ring on her finger, everything’s off the table – except the wedding and buying a home… then kids…
In what world does that make sense… ???
I see couples that head down the investment property path, making headway to a financially comfortable life, to then get smacked in the face with a frying pan and about face totally abandoning this path to make a B-Line into buy a home.
Must have Home – Must have Home… like an Energiser Bunny… Like the ring has some magical power or hypnotizes couples.
And it’s just not the women putting the pressure on, the guys go into this warped world too, not sure if it’s the pressure they are getting or it’s just easier to abide???
All the good work they were focusing on previously has literally been chucked out the window. Now I can’t simply wedding bash without explaining, so here we go:
I have a ton of clients whom have literally done the above… they have set out on creating a lifestyle for now and in the future. They have saved hard and purchased 2 or three investment properties whilst either living at home or renting where they want to live (lifestyle choice).
If they continued on this path, by the age of 35-40 years of age they could set themselves up for life. They would own 6 or 8 investment properties, which they could then sell and buy home a little or zero home loan. Then they could quite easily afford to have children and the wife not work for 5 years… still have holidays and also use the equity in their home to invest in a few properties and start building their portfolio again. When the wife goes back to work, their portfolio could grow to as large as 10+ properties… you see when you don’t have a home loan, you have a ton of spare cash.
But then it happens; they get engaged… which I have no problems with… except their brains turn to mush.
And as they have spent all their savings on deposits for investment properties… they save the minimum deposit for a home and get a massive home loan, as they borrow the maximum loan, which the banks will give them. Now, because they are borrowing 95% of the purchase price they also pay a massive Lenders Mortgage Insurance premium.
This is exactly what they DIDN’T want to do when they started their investment plan… yet they just did!!!
Oh yeh, to afford to buy a home they must settle for a property of less quality than they currently rented and must move away to a suburb that they can afford. It’s not a suburb that they would have rented in, but they sell it to themselves as a good area because that’s all they can afford now…
And to add to this, the wife, a short time later becomes pregnant. Again, I have no problem with couples having children… as long as they can afford to do so… but because they borrowed their maximum lending calculated on two incomes, when they go back to one income, they struggle to live and pay the bills…
What happens if interest rates go up??? I don’t even want to go there…
So what’s the first thing to go… the investment properties, well before they have matured and generally at a discount price, just so they can get some cash from the sale, which is not used to pay down their home loan… it’s used to simply live , because they are on one income.
That’s one hell of a sacrifice, to just say you have a home of your own!!!
And although I have painted a grim picture here that sounds over the top… I can tell you I see a similar story to this with over 30 couples per year…
Might be why I am not married???