Why bother owning a PPOR ever again?

Surely if your pockets are deep enough and your aspirations are low enough you can have your cake and eat it too.

That is, when your deposit for the PPOR is more than significant, greater than say 50%, and your choice of PPOR is not outrageous for your current station in life…you can have both stability and the opportunity to leverage the equity to continue to invest ??

I believe over the past 2 decades however, that young couples aspirations have gone through the roof, but their ability to service the lifestyle has not.

Many couples starting out in the 50’s and 60’s were happy to purchase 2 bedroom fibro tile houses in very average suburbs on normal sized blocks and just take it from there – maybe upgrading their PPOR once or twice, finally reaching the 4 BR 2 BTH brick and tile house stage in their later years…ironically just as their offspring ‘flew the coop’.

However, it’s that younger generation, of which I count myself in, who have been brought up in that relative luxury – who do not want to and frankly, flatly refuse to do the hard yards in those basic accomodation facilities. They cross their arms, stamp their feet and say “If I can’t have the same standards, I don’t want anything.”

Have a look at the average house young couples are buying nowadays…mostly they are way too good and way too expensive, and with 5 or 10% deposit, they’ll go nowhere fast burdened with such crippling NTDD (non-tax deductible debt).

The wife and I rented for the first 3 years of our marriage and managed to purchase 2 investment props. In hindsight I think it was the right thing to do.

The 3rd prop. was our PPOR, of which we had managed to accumulate a 90% deposit. It was a pretty modest house in a very modest area…to the point where older relatives took me aside and said “You know, I believe your wife deserves a better place to live than this.” We both ignored them at the time, gritting our teeth, safe in the knowledge that over the years our situation would change for the better. Nowadays these same relatives cannot believe where we are living and don’t understand how we got there.

Fighting against the tide of mediocrity, and the ingrained belief system it harbours, is one of the hardest things to do.

I think one of the most succinct illustrations of this subject is the cartoon at the very rear of Noel Whittakers “More Money”, which compares two couples. The first couple is renting and living it up on a smooth street, and as time goes by their situation gets worse and worse. The second couple struggle on bikes on a rocky road and eventually get to the smooth road and off they go. That cartoon was the inspiration that pulled us through when the knockers put us down.

Cheers,

Dazzling

“No point having a cake if you can’t eat it.”

You also lose all capital gains tax benefits. This does not bother me at all.

The Mortgage Adviser

Hi Vanessa,

It is not illegal at all if you structure the ownership properly. If you buy a home in a company or trust name, you do not own it. You can live in it and rent it from the company or trust. The company or trust then repays the mortgage. The lot is deductible but you will have to pay CGT if you ever sell that home.

The Mortgage Adviser

Hmm…. I just have a problem with it ‘coz even if the company on behalf of the trust owns the property… isn’t there some sort of “conflict of interest” or anything due to you being part of the company and/or trust ?

Wishing everyone radiant health!
Vanessa

Vanessa, a company and a trust are seperate legal entities. If you die, they continue with someone else at the helm. It does not matter that you control them as they have their own ‘life’. It is like renting from a relative.

Amused, I do not understand your qestion.

The Mortgage Adviser