First-home buyers told to think twice about large mortgages – The New Daily

First-home buyers told to think twice about large mortgages – The New Daily

Hugh recently chatted with Matt Johnson of The New Daily to weigh in on first-home buyers taking out large mortgages during COVID-19.

Excerpt below

Although hikes of that magnitude are unlikely in the near term, Centaur Financial Services director Hugh Robertson said households should use long-term averages to decide whether they can afford a home, as mortgages normally last for at least 25 years.

This would mean only taking on a loan if you can afford to meet the monthly repayments at 5 or 6 per cent interest, he said.

“What you don’t want to do is buy now at a great interest rate, but then have to sell it in the future,” Mr Robertson told The New Daily.

“You don’t ever want to be a forced seller.”

Mr Robertson advised first-home buyers and up-sizers to think about the bigger picture of their lives, describing the narrow fixation on interest rates as “first-level thinking”.

“It’s got to be realistic and fit within your overall personal financial plan,” Mr Robertson said.

“Just because a bank says you could borrow $800,000 doesn’t mean you should borrow that. And for anyone who is just starting out, we would say start with something that’s affordable and not your forever home.”

Read the full article

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