Trying to get into our first home
Donation protected
**I will be adding any personal savings as manual donations to bump us towards the total we need**
I am self-employed with 2 kids and the banks are making it increasingly difficult for self-employed business owners to get loans.
To prove we can service a loan, my web design business’ profits need to be high. To do this, I'm minimising business deductions this year.
But then there are the deposits.
With declaring high profit, comes paying high GST and high income tax. This means we have hardly any money left to spend on necessities let alone save. If we didn't have to record a high income, all the money we have set aside to pay income tax would cover our deposits. But we need to account for both serviceability AND deposits.
There is only one bank that will give us a loan due to our financial specifications and they don’t accept rental history as savings. Our current hurdle is trying to get a home loan with no financial assistance (such as early inheritance, equity gifts etc.), on ONE, self employed income, 2 dependants, and real, raw savings.
You might be thinking, “Just be patient and buy in a few years.” But here’s the sitch.
Each year we delay buying our first home, costs us money. Because we are renting while trying to save, it’s costing us approximately $20,000 per year in rent. We are also reducing business deductions to an acceptable minimum. This means we are paying the ATO approximately $15,000 that we would normally get to keep in our pockets.
As some of you may know, Palaszczuk government’s FHOG has increased from $15,000 to $20,000 but only for the 16/17 financial year. This is a $5,000 increase. If we don’t sign a building contract before June 30, we lose this additional $5,000.
Then we consider the immeasurably rapidly rising costs of real estate, building and cost of living. With the current valuations of Providence real estate over the past 24 months, this is an increase of roughly $90,000 per year. So you can see, the cost of waiting is astronomically expensive and is much more than just a matter of “impatience”. There is an out-of-pocket cost of at least $130,000; just to postpone the purchase of out first home by 1 year.
Desperate? Clearly. But we’re doing everything in our power to achieve our dream. I’m taking up an after-hours job in retail, we are selling our family car, moving the kids into our bedroom to make room for a homestay student, cancelling Netflix and have been giving our toaster a good workout over the last few months. But that won’t be enough.
To save enough we’d have to save 75% of our income. The amount we have left over is just enough to cover rent (which by the way, is more than a mortgage repayment), let alone our bills, food, petrol ect.
Out of faith, we have put a $1,000 deposit on an unregistered block of land in South Ripley’s Providence estate but the deposit balance isn’t due until the land registers in July.
There is a light at the end of the tunnel. It’s dim. It’s expensive. But there is a light. It will literally be a miracle if we pull this off, but luckily our God is a god of miracles and in him we seek provision and are able to enjoy an abounding grace that is unlike anything in his creation.
Would you buy me a coffee?
I am self-employed with 2 kids and the banks are making it increasingly difficult for self-employed business owners to get loans.
To prove we can service a loan, my web design business’ profits need to be high. To do this, I'm minimising business deductions this year.
But then there are the deposits.
With declaring high profit, comes paying high GST and high income tax. This means we have hardly any money left to spend on necessities let alone save. If we didn't have to record a high income, all the money we have set aside to pay income tax would cover our deposits. But we need to account for both serviceability AND deposits.
There is only one bank that will give us a loan due to our financial specifications and they don’t accept rental history as savings. Our current hurdle is trying to get a home loan with no financial assistance (such as early inheritance, equity gifts etc.), on ONE, self employed income, 2 dependants, and real, raw savings.
You might be thinking, “Just be patient and buy in a few years.” But here’s the sitch.
Each year we delay buying our first home, costs us money. Because we are renting while trying to save, it’s costing us approximately $20,000 per year in rent. We are also reducing business deductions to an acceptable minimum. This means we are paying the ATO approximately $15,000 that we would normally get to keep in our pockets.
As some of you may know, Palaszczuk government’s FHOG has increased from $15,000 to $20,000 but only for the 16/17 financial year. This is a $5,000 increase. If we don’t sign a building contract before June 30, we lose this additional $5,000.
Then we consider the immeasurably rapidly rising costs of real estate, building and cost of living. With the current valuations of Providence real estate over the past 24 months, this is an increase of roughly $90,000 per year. So you can see, the cost of waiting is astronomically expensive and is much more than just a matter of “impatience”. There is an out-of-pocket cost of at least $130,000; just to postpone the purchase of out first home by 1 year.
Desperate? Clearly. But we’re doing everything in our power to achieve our dream. I’m taking up an after-hours job in retail, we are selling our family car, moving the kids into our bedroom to make room for a homestay student, cancelling Netflix and have been giving our toaster a good workout over the last few months. But that won’t be enough.
To save enough we’d have to save 75% of our income. The amount we have left over is just enough to cover rent (which by the way, is more than a mortgage repayment), let alone our bills, food, petrol ect.
Out of faith, we have put a $1,000 deposit on an unregistered block of land in South Ripley’s Providence estate but the deposit balance isn’t due until the land registers in July.
There is a light at the end of the tunnel. It’s dim. It’s expensive. But there is a light. It will literally be a miracle if we pull this off, but luckily our God is a god of miracles and in him we seek provision and are able to enjoy an abounding grace that is unlike anything in his creation.
Would you buy me a coffee?
Organizer
Jake McLeod
Organizer
Carole Park QLD
