Are We Stupid?

Hey Barefoot,

My wise old man got me and my boyfriend onto your book, and since September we've put $35,000 into an account for a house deposit! We have a combined annual income of $140,000 pre-tax. The problem is, we have our hearts set on an expensive suburb in Melbourne where prices currently range from $750,000 to $900,000. All our friends are saying we're stupid for spending so much on a first home. Are we stupid?

Nic and Pete

Hi guys,

Yes, you are.Just for kicks I went to a bunch of banks’ ‘how much can I borrow?’ calculators and put in your digits (as you have probably already done). And hot diggity dang, each one calculated that you could borrow $850,000 (or more!), despite the fact it would chew up over half of your combined income after tax.

Problem is, these are marketing tools designed to get you in the door, not lending approvals. On your current numbers, I think you have as much chance of getting a loan as I have of getting my kids to eat all their veggies tonight.

Scott