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G'day, guys and welcome to this episode of Aussie English. Today, I'll have an amazing interview episode with you where I sit down with my good mate James and we talk about how to buy your first house in Australia. So, James sits down and tells us about his story renting, living with his parents, ending up with a sizeable deposit of about 10 per cent to buy a house and then getting a loan from the bank. Talk about mortgage and I also tell you about what's going on with me and Kel at the moment because we're doing a bit of house hunting, so it's a really good interview, guys. I hope you like it. Anyway, Let's just dive into it, I'll give you guys James Buchan talking about how to buy your first house in Australia.

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Alright, Jimmy welcome to the podcast.

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Thanks, Pete. It's good to be back. It's been a little while.

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I know, so this is the first one we're going to try with James here where we're going to try and video it make it look a little bit more professional, but I thought today, Jimmy, you're one of the only people my age I know that owns a house and, so I thought it might be a cool thing to talk about house hunting and, you know, getting a mortgage and buying a house in Australia, especially, I guess, around Melbourne and Victoria. So, you ended up buying in Geelong. Do you want to tell us the story and like, you know, start with a bit about where you're from where you grew up and how you ended up a happy house owner?

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So, really, really quickly, the long and short of it is I was born in Melbourne and I lived in Melbourne probably till I was about three years old. My parents had a house in Camberwell that they had completely renovated.

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This is where my grandparents live, in Camberwell.

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Yeah, yeah. And I liked it, it was really nice. And then after that we moved to Tasmania and I probably came to Geelong, probably when I was about 12 or 13 and more or less grew up in Geelong, went to school, met you in high school and, you know, life just sort of went on its way and I got a job at Deakin University.

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Used to work with my mum for a while, right?

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Yes, that's right.

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Sort of gone in and out of working in the same department.

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Yeah and your mum, she has the same position I guess as my boss in the science and an engineering faculty. So, there is a little bit of overlap there and every now and then we're involved in some kind of meeting.

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Geelong as a small world, right?

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It is a very small place. So, I had a secondment to the Law Faculty developing one of their online law programs.

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What is a secondment? This is the kind of language that, because I'm not working in that sort of area, I don't think I know. So, you might need to explain that to me and the listeners.

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Yeah. So, a secondment is, let's say, I'm in my current job and there was this other job that came up and it was for a two year contract only, at which point they said 'do you want to accept this higher paying job but it only goes for two years? But you'll lose your lower paying ongoing job'.

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So, that you don't have the stability with that job still being there afterwards it's like this is a better job, but it's uncertain for a long period of time.

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Correct. And, so that's basically what happened and my boss's boss at the time who was in charge of all of our staff movements I figured it was worth a shot. So, I said to him. look do you mind if you give me a secondment because that way it gives me the stability of my old job should anything happen to my current, you know, the new one, and at the end of that those two years, if it doesn't, if the new job doesn't translate into an ongoing job, can always go back.

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So, secondment is the ability to return to that original job, is it?

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That's right. So, you get to really try out a new job you, get to be paid at a different level, sometimes it's a sidestep.

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Yeah.

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But in my case, it was an increase in salary, and...

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Sort of up and to the side, was it?

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That's, that's right. So, I had this two year secondment, which we were all hopeful it was going to be made ongoing and, I guess, unfortunately it wasn't, but it did allow me to develop some good savings and in the interim I was renting in Highton with another friend of mine that we'd went to school with. And it was good, I guess, being able to rent, you know, it allowed me to learn about myself from what I liked and sort of how I operated on a daily basis. In hindsight, you know, I mean... Maybe not such a good thing to rent because I know that Mum and Dad would have allowed me to live with them and they were pretty good to live with.

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But you kind of need a strike out on your own, right? 'Cause at least for us as Australians growing up here with parents who are Australian, you know, you tend to have that ability especially if you're getting a job near your parents and where you grew up and everything to stay at home. But quite often what you want is to be able to leave and be independent, you know, not stay at home and be living with your parents, especially when you get a full time job, right? So, that's the sort of push to get you out of the nest.

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Yeah, pretty much. And I guess it was all sort of a chance to sort of prove to myself that I really was actually independent.

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But at the, I guess, disadvantage of not being able to save up as much money because you have to pay for rent and everything like that, that your parents would otherwise pay for.

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That's absolutely right and towards the end of renting with my friend I was starting to look at the property market. You'd read newspaper articles and you'd see that Australian house prices just everywhere more broadly speaking, were just going up and going up and at the same time I started to get worried because I was thinking hang on a tick, I've got this new secondment job and any of the extra money that I would be earning in this job I'm losing by paying in rent.

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Yeah.

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I wasn't going backwards, but I wasn't really going forwards at the same time.

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As fast as you could otherwise be going forward.

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That's correct, and so when the time came for that lease at the rental property, I decided that I wasn't going to renew the rent and I was going to move back in with Mum and Dad and...

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I guess the good thing, though, about your parents' place in the way it's set up is that they have a huge garage on top of which there is a really big room.

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That's right.

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Which is where you were living, so you were actually kind of in like a granny flat, right? Or like an outdoor apartment as opposed to being in the exact house with your folks in another room. So, there was at least that little bit of extra distance, right? You could come and go without always being like 'hi mom, hi dad, sorry what? Here's everyone that's coming over'.

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That's right. So, and that was particularly useful.

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Except you didn't have a toilet.

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I didn't have a toilet.

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So, you had to go inside every time.

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That was particularly annoying.

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They didn't even have an outdoor dunny, man?

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Late at night.

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And in hindsight, if you were designing that building, you'd just make a complete top level area that goes all the way to the back of the garage with a bathroom and a sink and maybe even a small kitchen.

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But then you'd never live, James.

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But then you'd never leave, exactly.

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So, I should also say that because I was on the higher paying job, I had to do a lot of overtime to get the launch for the program that we were working on to be ready by certain date. And as with any long project I find, you're always going to have either an overrun in time or an overrunning cost and in Deakin's case this was both. We just simply weren't ready. So, I had to put in some overtime hours, which I did, I was quite happy to do it, I was mentally exhausted afterwards and unbeknownst to me Deakin overpaid me.

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I wasn't sure if you were going to bring this up or not. So, this is a funny part I guess of the story, right? Because they ended up giving you more money than was your salary, which helps you get towards a better deposit for a house, right?

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Correct. So, I won't mention the amount that they overpaid me by, but let's just say it was significant, but because I'd put in so much overtime and I was on the higher...

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You weren't thinking about it, right?

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The higher salary to begin with, I didn't think about it.

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Who's going to complain? You get a few extra thousand dollars or you know whatever in your bank account you're not going to be like 'well, that seems wrong', you know, unless it's, you know, so exorbitant in quantity, that you'd be like 'that definitely can't be right'.

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No. And it was right amount, around that amount that did seem right that I didn't question it.

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You were instead like 'wow I have been working a lot recently'.

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He's been working really hard.

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Have you seen my pay cheque?

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And Deakin didn't catch up. If they'd e-mailed me about a week later and said 'Hey dude, look, we've overpaid you', I would have said 'yep, sure here's the money back, not a problem'.

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Yeah.

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Take out what we've overpaid you and all is good. They didn't contact me for about a year, but in that time I had moved back home. Deakin had given me this nice little, shall we say, incentive to save for a house deposit. And that was what really sort of kickstarted it, I'm like, I can do this, I've moved back home, I really have to work on saving.

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Yeah.

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And at that point I developed enough that I could then start looking at properties.

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Because, I guess, yeah, it's funny that, before we get into that, it's it was a blessing in disguise, right? Because you had to ultimately pay the money back to Deakin when they discovered their error, but the fact that they had done that in the first place allowed you to feel like you were being able to save enough that you could get it together to get a deposit.

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That's right.

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That you may have not otherwise been able to do it.

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I just forgot to say that when they did email me, it was about a year later, they offered me several options, one of which was paying it back in full. The second of which was a payment plan and when I email... Our communication was 'well, look at this point I'd just bought a place' and I said...

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Sorry guys, I got no money.

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Sorry guys, I got no money. And so I said 'look, how about this amount per week? And I'll pay you back'. And it's all paid off now. And it worked actually quite well.

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Did you shit yourself?

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When I got that e-mail?

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Yeah. To be blunt, because that would have...it wouldn't....not so much that I owe someone money, I guess, it's just more 'crap, now I have to pay for something else', right? It's another bill that I have to organize, that it was unforeseen, right?

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Yeah, it was unforeseen, and that was actually particularly difficult because that was not an insignificant chunk of my weekly pay that they were taking away.

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Everything counts especially when you suddenly have a mortgage, right?

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Yeah, but, you know, as humans we adapt, we improvise, we overcome. And I was actually pretty proud of myself because I managed to, you know, to get the property, as well as being able to survive on a lower income all whilst paying of HECS debt as well.

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What's HECS debt for anyone who may not know what that is?

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So, HECS debt... The university will give you, well not the university, the Australian Government will give you sort of like a loan at a very, very small interest rate that will cover the costs of your course.

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At university.

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So, university education here in Australia it's not free. Non international student will pay more, but even as domestic students, depending upon your course, you do pay a certain amount from your weekly pay to repay your... once your salary reaches a certain amount, you have to repay that as debt to the government so.

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But it's pretty crazy, isn't it? On a side note, of HECS and how little it is, because I remember, you know, shitting myself thinking once I finished my PhD, I hadn't even looked at my hecs and was like 'oh my God, it's going to be so much I'm screwed', because you have to start repaying it once you make past a certain threshold in income per year and they take it out with tax. So, once you calculate your tax, they'll say, you know, alright we have to give you ten thousand dollars back on tax, but because of the hecs fee where they're giving you five.

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That's right.

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So, I was crapping myself, but I looked recently and it's only thirty six thousand dollars, you know? And that was an undergraduate degree that went for a year extra, so four years of undergrad, two years of a masters degree, so six years of university education, for you guys, I'm talking money, so that you have an idea of what it costs at least for an Australian going through this, you know, if you end up having kids here or whatever, but yeah, six years of education I think it's cost me about 36 thousand dollars, as opposed to the American system where it would probably be 10 times that, maybe more. So, it's about six thousand dollars a year.

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It's not that bad. I was I was thinking it was going to be heaps, you know? It's really not that bad is it?

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No.

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So, yeah, yeah. That's something you've got to take into account.

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So, how long did it take for you to put together a deposit and how much did you have to save up? Whether you want to talk about specifics or just the percentage of the house value before you could get a loan to get the house?

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So, so to sort of back it up a little, there was a house down the bottom of the street from my parents, it wasn't really the nicest house, it needed work. It was smaller than the one I've got now, and I looked at that initially and with the amount of money that I'd already saved, I could have bought that, but through one thing or another it just sort of look at needed work, and I wasn't quite digging it, so I let that one, I passed that one up and I decided, you know what, I'll continue to save even more to get something that's just a little bit nicer, so that I could have all of my possessions in this house.

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Well, when you're spending that amount of money, I imagine, you want to feel happy with the purchase that you make.

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That's it. One of the key necessities for me was a garage. I've got two cars one of which I keep in the garage and just a little spot to also store things like fishing rods, just loose bits and ends, pieces that you know we all seem to accumulate.

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And even that one is not big enough, right? You wish now, you're like 'God, damn it, I should have got a two garage'.

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And a spot to to install a little workbench which would be lovely, but you know you can dream, right? And the first house is never perfect.

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You have to get in the market.

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Exactly. So, I started looking once I'd got enough of a deposit around. And at that point, you know, I was going around the different suburbs with mom and dad, my brother and his girlfriend. They were inspecting, I was inspecting because you can't, at that point, you can't all be in the one spot on Saturdays when they had a lot of open for inspections. So, we sort of narrowed down sort of what I was looking for. They would go to some places, I would go to another. A lot of the time, you know, they'd get, you'd get a call and they'd say 'hey we're at this this good house. You should come check it out'. I'll be like 'ok, I'm just over here' and, you know, you drive several blocks to a different suburb away to take a look at a place and it's interesting because you do start to think... A, are these people asking too much for the place that you're looking at? B, you know, like how would this suit me?

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I remember one place I was looking at in a suburb of Bell Post Hill. The house was, I think, they were asking just a smidge over 300 thousand. You know, I feel like a two or three bedroom kind of unit with a garage that's roughly ballpark. And it looked reasonably nice, the price was slightly higher than I wanted to pay, and I think that the thing that put me off about that house was that in order to get to work in the morning I'd have to go down a hill and cross four lanes of traffic. And at 8h30 in the morning there was next to impossible. And I know that that's a very first world problems here we're talking about, but...

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Well, but you have to sort of take that into consideration, right? Like you have to think about 'ok, in my life what are the important things?' Like, do I have small children who need to be near a school?'. Because there's no point in buying or, at least, it makes your life harder if you buy a house that' say not walking distance from a school because then you have to drive them every morning. Or they have to get the bus every morning or, you know, how far away is it from work? So, you had to sort of take those things into consideration, right? And even if it's I've got so many options I might as well find one where I don't get in traffic every day, you know, before going to work, why would I not try and do that?

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Yeah. The only way for me to get out of this street would have been to have turned left in the morning.

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And that going the wrong way?

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Going the wrong way. It just didn't make sense combined with the fact that the little lady that was selling it from Melbourne wanted more than what I wanted to pay. That was a no bueno for me. So, I was, at this point, I was actually getting a little bit frustrated, I'll be perfectly honest because I'd seen that was the house at the bottom of my parent's street that I passed on, there was this other place in Bell Post Hill that I'd looked at that was really nice, but a bit too difficult to get out. You know get out of the street in the morning, and the lady wanted slightly more than what I was willing to pay, and then I guess I've got I got a call from mom and she said 'look we were just driving through this street, we noticed that there was this house that was for sale and they had the open for inspection'. I jumped on the website, mum said, and she took a look at you know the bedrooms and she went for a quick inspection. By the time I'd gotten over there the inspection had closed, but I phoned the agent and the agent said 'look, if you're genuinely serious, I'll open it up and we'll be able to take a look'.

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And I took a look and it met all of the criteria. It was a little bit, it still is in my mind, a little bit small, I wouldn't mind a slightly larger entertaining space and a slightly larger garage space, but it had you know off street parking. It had a garage a little outdoor area at the back. It's got two bedrooms got main living room. It had all been reasonably renovated relatively recently.

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So there wasn't a lot of words you needed to do yourself.

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Nothing that I really needed to do myself and in terms of like the garden and maintenance it's all very low low maintenance. So, there's no paddocks or anything like that that I've got to mow. In terms of things that I might like to do to it maybe some down lights and some air conditioning, but besides that, it's pretty much sorted. I don't have to do anything.

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So just pay that sucker off.

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Pay that sucker off. The other good thing it's very easy to walk. So, in terms of, you know, like you've got to look at things that are important for you as you were saying earlier. My family's reasonably close by, so my brother's place is ten minute's walk at the most.

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Yeah your brother's place, ironically, I think he bought it after you, right?

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He bought his just before just.

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Because he's only a few streets away.

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That's right.

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When we're driving and I go to your place I'm always like... Wait do I turn off for Dave's or do I turn off for James's first?

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Yeah.

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I'm always like... Crap, which one is it?

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So, his is about ten minute's walk, so it's really nice. If I want to go over to his in the evening on a Friday and I have a few too many beers, I have no problem leaving my car at his and walking back home it doesn't take me long. And where I live used to be a railway line to the cement works that Geelong had.

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The ones that got painted murals on it, right.

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The silos.

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I think I did a vlog on that.

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You did a vlog on that.

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Yeah, yeah, gotcha.

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And those cement works, they closed down, and they ripped up the rail track and nature has reclaimed that, so I've got a nice park over the road, there's a lot of native birds, people can walk their dogs there. So, I feel that that sort of adds a little bit extra to...

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It's funny how important that is because I keep saying that to Kel, 'cause we've been house hunting recently and I was wanting to talk about this because of that. And every time we've gone to seen somewhere or we've looked online to look at different suburbs for us and, again, I don't know if it's a first world problem, but I'm always like I want to be near there somewhere I can go walking and you know feel like I'm in nature, whether that's at the beach, at a river, near a forest, near some park land, somewhere where I can just get away from suburbia, even if it's just that 10 or 20 minutes a day, you know, to at least have that nearby because there's something psychological that just makes you feel a little bit calmer, I think, than if you were to say live in the middle of a city.

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It calms you down.

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So, it is funny how important that is to a lot of Australians, I think.

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And I think that also adds a little bit to the property price as well.

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Yes.

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Houses that are in an area where you can, you know, you can go for a walk, it calms you down, feels a little bit greener or, you know, you're near the ocean that that sort of... That certainly does, it's desirable.

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So, giving people an idea, do you mind talking about prices and how much you payed?

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Not at all.

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So, what... How much was the deposit that you put together price and percentage wise and how much was the full house? And what was the process like getting that loan? Was it a difficult one? There are a lot of questions there.

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There are a lot of questions. So...

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Deposit.

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So, first of all, I saved 30 thousand dollars. As a single person, let me tell you that is a truly insane amount of money.

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I've never had that amount in my bank.

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No.

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So, I'm very impressed.

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And I guess, you know, you get that itch you think...as a car person, you're like this could be a nice car parts could buy or I would really like a new pair of shoes. So, you have to have that determination.

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A thirty thousand dollar pair of shoes.

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Two hundred dollar pair of shoes.

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But you had to keep making sure you didn't scratch those itches.

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Exactly.

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And as your income goes up, you will get what I like to call lifestyle creep, where you know where you find yourself without even thinking about it spending on things that you probably don't need. So, you have to really have that kind of self-control.

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It is funny, isn't it? Even Kel and I, I'm always like 'oh, you know, Aussie English is doing well, we should go out for lunch'.

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Yeah.

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It's like the next day comes 'oh we should go out for lunch', and it's like, Pete, cut it out, you know, you can, but you shouldn't.

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I even sort of have that mentality now with the coffees. You got me onto these coffee...

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Sachets...

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They're not pods, they're sachets.

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Yeah, that you can get from Coles or Woolies.

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Yeah. And I have them sometimes when I just don't feel like... The effort of going to a coffee shop can be too much.

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And they're like 30 cents a pop.

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They're considerably cheaper and if you're...

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Better than five dollars for a large cappuccino.

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So, if you're saving for a house, those are the kind of good things you want to do. So, in my case I saved 30 thousand...

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Yeah, which ended up being what? 10 percent?

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That's correct.

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Thereabouts.

150
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So, did the bank require 10 or it's anything about five or?

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I think...I think it was above five that the bank's required.

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Mum and dad had the option of going guarantor, but I'd had enough saved and the property price was cheap enough that they didn't need to, but they were willing to. Guarantors. Should we sort of talk about that a little bit?

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Tell us first about what the process was like buying the house, you got the deposit together, the bank gave you the loan for the remainder two hundred seventy thousand dollars. What happened then after that?

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So, I should also say there was another couple that were looking at the house and we both put in offers. I, fortunately, I guess, having learnt from my brother, he and his girlfriend got all of their ducks in a row. So, by the time that they were ready to make an offer, they were able to do a very very quick settlement, and that's quite enticing for a lot of sellers.

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Absolutely.

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So, to have have it all wrapped up and have the title transferred to your name to own the house, that's so enticing for a lot of sellers. So, having seen how they had gone through it, I'd made sure that I was ready for a very quick settlement. There was another couple that also looked at the home and knowing this I said look, this is, you know, roughly what I'm willing to pay. At the very most, I said to myself, about two hundred and ninety two thousand dollars or thereabouts is at the most what I would be willing to pay for this property.

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Were you working the maximum price out on that lump sum or on the repayments that would be required on a monthly basis of the mortgage?

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I had done that. Yeah, and based on...and also based on what I knew I could afford and my living costs, I'd sort of worked backwards.

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That's a hard thing to do with Kel and I looking at houses currently. A lot of the time I'm like 'oh yeah I could afford this' and then 'oh wow This house looks great', it's only a few hundred dollars more. Alright, maybe I can afford that too'. And then you kind of like... Every time you go up, you know, that money is going to be coming from you going out or you saving to go on a holiday or you're doing other things with that money under the assumption you have enough to cover that. So, it is funny you have to kind of be like no, I need to stick to... I just want, you know, 50 percent, 60 percent of my income to go towards the thing and that's where I have to sort of do a hard....that's the limit.

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And that's, in my case, that was exactly what it was. And, so this other couple that were looking at it, I guess I'd put in my bid and I'd said I'm very happy to do a 30 day settlement, so very quick. There was only one other downside which may have put this other couple off, that was that there was a tenant in the property and I couldn't move in for a year.

161
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So, they were potentially wanting to buy move in straight away you think?

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That's right.

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And it was the what? The lease that the person had signed, so they could stay there for a year, but the person was wanting to sell the house or something?

164
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That's right. So, they had worked out some deal before I was even involved that if the house was sold, that they would still be able to continue living in it.

165
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But that's a pretty good thing, right? If you could stay at your parent's place, keep saving money and the person's paying off your mortgage with the rent. That's a pretty good deal.

166
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Which is exactly what happened. So, they paid off ten thousand dollars of my mortgage.

167
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Boom. Before you even moved in.

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Before it even moved in.

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Amazing.

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That was extremely easy. So, that was a no brainer. I wasn't worried. I know a lot of people, you know, first home buyers they're itching to get into their house.

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Well, that's like me and Kel currently, definitely, the whole reason for buying the house is to get into it because we...and two, we can't live with our folks or my folks here and to rent and pay mortgage at the same time, even with it offset by the rent the person would pay it, wouldn't match the mortgage that I'd be paying, so it'd be crazy. Definitely was a good set up that you had going there for the first year.

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It was, so that worked out really well. And then, so there were a couple of small things like. There was a storm and the antenna blew off and the real estate company called me and they said look your tenant would like a new antenna. And I said... Well, he can just watch YouTube. I don't watch any TV, but I figured, you know what, I need the TV at some point as well, so I'll just go ahead take the money from me.

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All of a sudden you had the landlord responsibilities as well of repairing anything that went wrong with the house.

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That's right. Yeah, so that was that, a year went by and then I more or less moved in. That in itself felt very strange. The first night or two I was sort of in a, you know, trying to find new surroundings and get used to it. That's a bit of a bit of a shock, but you make it your own home very quickly. And I went and got a little rescue cat from Geelong Animal Welfare Centre. And that's another thing that you can't do when you're renting, at least you haven't been able to up until recently, I think, the Victorian Government has just changed the law, so if you want , as a renter, I think you can now have, I think you can now have a cat or a dog.

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It is coming in next year. The law is passed, but you have to wait until next year for it to be, to come through, because when we moved in here I was like 'alright, I want pets', and I said to the landlord, you know, we're wanting to get some cats or, you know, a dog to the landlord, I said to the Realtors, the real estate agents and they said 'oh, the landlords not ok with it'. And so we weren't allowed to, because I said explicitly 'but wasn't that thing passed?' and they're like 'it doesn't come into effect until October 2020' or something like that. So, I was like 'oh, great'. But yeah, so in the next year or so that'll be the case.

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Yeah.

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Alright so and then what happened after the year? The guy moved out and you moved in that was it?

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The guy moved out. He did want to extend his lease again, but by this point, although, I was very happy that he'd paid off ten thousand dollars of my mortgage and he for... Besides the antenna, he'd been a very good tenant, I had no problems. I was, I was ready to move in and the real estate company that I dealt with that were very nice, they came past with a bottle of sparkling wine and they'd given me like a little, you know, like a present, you know, like cheese board and some nice knives and a nice bamboo cutting board. They're like 'congratulations. Here you go!' and then it was just a case of moving everything in and getting settled.

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And so what have the mortgage repayments been like if I can ask in terms of, you know, what people should expect on a three hundred thousand dollar house where they they borrow say 70, what am I doing? 90 per cent of the home loan? What does that translate to in terms of monthly repayments usually?

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In terms of monthly, I can tell you what it takes in terms of fortnightly repayments.

181
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Ok, yeah, yeah.

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I'm so, I'm roughly covering what I'm paying roughly what the house would be worth. If you say it's a three hundred thousand dollar house, I'm paying 300 dollars a week in mortgage repayments and I have to say, like as someone who's rented, you know, that's only marginally more than renting.

183
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It's less than rent.

184
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Well, yeah.

185
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You know, that'S much less than what I'm paying here for this house. Granted it's a four bedroom house, not a two bedroom house, but still it's pretty crazy.

186
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Yeah and compared to what I was renting with my friend, that was only, I'm paying now only marginally more and I get to own my own house and I guess for me like the only thing that drove me to really get my own property was just the worry that property prices in Australia are just getting out of control.

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Well, there was a story I think I told you recently where we walk down the street nearby called Sunset Strip and there's a house right near the water, right near the beach. You know, probably five minute's walk and I remember looking it up online and looking at the price, because it had the big you know 'for sale' sign out front and thinking 'how much is this?' and it was like 430 grand and I was like 'what? 430 grand in Ocean Grove. That's ridiculous, that's barely anything, it's so cheap'.

188
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And that was 2012 and I was like... Shit. And, so I looked it up again because it had obviously been sold in 2012 and the people were selling it again and it was 750 thousand dollars. So, it almost doubled in price in seven years, it's just insane, but because the interest rates are so low, right? So, I assume with your mortgage repayments a big chunk of it is principal and there's only a small amount that's really interest, right? Because the interest rates are so low.

189
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That's right.

190
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There are like three or four percent max.

191
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Yeah.

192
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That we can now as, you know, millennials or whatever afford to borrow massive amounts of money for 30 year loans because we don't have to pay off as much.

193
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That's right.

194
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In interest overall, whereas, I think my parents bought their first house for like under a hundred thousand dollars and they had interest rates of 17 percent, something crazy and they were just like it was more interest than principle for a long time.

195
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Which is just insane.

196
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Yeah, but yeah. And, so anyway, I guess Kel in my story we were looking recently around Ocean Grove and the prices were just way too high. You know, the house we're in is an old holiday house with no central heating or air conditioning. There's like one fan in the main room. It's a nice house, it's pretty quaint, it's four bedrooms, it's pretty big, but there's a lot of work that needs to be done too and the thing would go for over eight hundred thousand dollars, right? So, the better part of a million dollars is what this house would cost. And it's not the house, it's the land.

197
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It's the land that always cost.

198
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And so as a sort of reference, I think, my parents bought the house, which is, you know, a stone's throw away from here, it's up the hill. I think they bought that in 96 for 154 thousand dollars.

199
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That sounds about right.

200
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And today it's worth over a million, I think around thereabouts, because of the land, it's crazy. I remember dad always telling this story about when we moved to Ocean Grove there were a lot of blocks lands, there were a lot of blocks of land that hadn't been built on, all over the place, so were paddocks everywhere, and dad had four paddocks behind our house down the hill that didn't have land on them and each of them went for sale for like thirty thousand dollars each after he'd just bought the house and sending me to a private school and Annika going to high school and having a bunch of other, you know, things to pay for, he was like 'I guess I can't afford it'. So, they went for sale for 30 thousand bucks each and today they're seven hundred thousand dollars each and he's just like...

201
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When we lived in Tasmania, we had, we were very close to the beach, we were probably less than 200 metres from the beach and, you know, you would go to sleep you'd hear the waves at night. And my parents had similar to what your dad mentioned, two blocks.

202
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The option of getting those blocks of land.

203
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They did. They owned those blocks of land and we had on one we had a fruit orchard in one paddock and the other was just a paddock, nothing, it was just grass. And I just remember all it was, was just maintenance on my dad's behalf, always having to borrow a ride on mower just to keep the land clear.

204
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So, it was bushfire danger, right? You want to keep it all clear of the long grass in summer.

205
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Yeah, I mean every now and then we'd find a bluetongue lizard and that was cool and we sold the house for, I think, 150 thousand and these blocks of land I'm pretty sure they only went for 10, 15, 20 thousand at the most, again, all up.

206
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And again in that case, I guess, all of the value is in the house, right? Not the actual line itself.

207
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Not the actual land itself.  And we moved to Geelong. The rest is history. Mum and dad bought a house in Manifold Heights for 150 in about '97.

208
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And again that house is worth a lot now, right?

209
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That house is gone up a fair bit, but at the same time similar story to your dad's, you just think about those blocks of land and these days population growth, you know.

210
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It's pretty crazy.

211
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It's crazy and, you know, that desirability to be close to the water in the bush. It's very enticing for a lot of people. Priorities just change, I guess.

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And I guess, I should mention, before we finish up, the good thing about Kel and I, so I didn't think for a long time that I'd be able to get into the house market for years because I was thinking I'm going to have to rent, Kel sort of you know working for me slash taking care of Noah, so she doesn't have a full time job to be helping me save towards a house or helping us save towards a house, so I was thinking well, what am I going to do? And it wasn't until I went and saw Anthony Tripolino our friend who we went to to school with, I say his name because he's an accountant in Geelong, great guy, if you guys need an accountant, go check him out.

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Very friendly.

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Anthony Tripolino.

215
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Always up for a house.

216
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I went and saw him and he was like 'have you got a house yet?' and I said no, I haven't, I haven't got one yet. I don't have enough money, right? Like how much of...How much do you have to put aside to get a house? 20 percent? 10 percent? Whatever it is, you know, and houses like 600 grand. And he's like 'man you can just get your parents to go guarantor'. Where they sign effectively a certain percentage of the, well, the equivalent of the deposit on the house from their equity that they have in their house or assets that they have. So, they sign as the deposit, I guess. And once the house is worth, you know, whatever the deposit was on top of the original price or you've paid off the equivalent of the deposit they're released from that. And I was like what? That's a thing? I didn't, you know, I hadn't really thought about it. I thought you have to get a deposit.

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No.

218
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And, so again, Anthony is like yeah, ask your dad and, you know, maybe he won't be ok with it, maybe he will, but you know, check out your options and I thought 'oh crap, that's a big ask'.

219
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Yeah.

220
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So, I'll ask dad and that's like 'oh, yeah, hell yeah, I can do that'. He's like 'worst case scenario you guys get kicked out because you can't afford the rent I'll just sell the house because it'll be mine'.

221
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Yeah.

222
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So, I was like ok... So, within, you know, things got moving within a week I went to the bank with dad last week, spoke to them, applied for a home loan or at least applied for an amount, so that they would tell me in tomorrow they're going to ring me in the morning. I got an email from the bank manager saying tomorrow they'll call me and tell me how much I can borrow.

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Yeah. And just on that I remember, that's probably a side of this topic that we haven't covered was, I had the meeting with the bank. They'd told me how much had been approved for, and then, you know, obviously the purchasing of the house once they told me how much had been approved for, and then you've got the meetings to get the ball rolling, you know, to come down to the real estate company, to get documents signed, you know, head over to the bank, get documents signed.

224
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Did you worry too much about mortgage brokers or anything like that?

225
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I had a mortgage broker come to my house.

226
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Yeah.

227
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As in your house the one you bought or as in the house your, parents' house, while you were waiting to buy that house?

228
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No, while I was waiting to buy up. And as it turns out look the mortgage broker that I had seen just wasn't able to offer, you know, like, you know, a competitive enough rate.

229
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Compared to what the bank was already giving you.

230
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Compared to what the bank was offering.

231
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Oh, nice.

232
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So, and I would have been happy to go for it through a mortgage broker, I know my brother and his and his girlfriend they have, but...

233
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And the mortgage brokers are paid by the bank, so they're free, right? For you.

234
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That's right. Yeah.

235
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Yeah.

236
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So, then at that point it was just a case of going and getting the documents signed, getting the conveyancing done and just making sure that, you know, you're reading, reading it all sort of understanding it, understanding what your repayments are, the interest. And I have to say like it's a pretty sickening feeling. Initially, I was just very worried, very nervous. I thought 'what am I signing myself away for?'.

237
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And because there's so much paperwork, I didn't read it all down to like the all of the fine prints, so I was initially very very nervous that there was something there that was there to get me and that I'd be caught up somewhere, but having said that, you do your sums, you work out what you can afford, you work out, you know, you sort of go backwards in all of your expenses and you'll be fine. So, I did that and that's been several years now. I've got some little trees growing out the front, got a little garden growing at the back, I'm growing a hot plant, I decorated I took the day off as recreation leave and I did some work in the garage.

238
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Haven't been bothered by any debt collectors, so you're doing well/.

239
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Haven't had my kneecaps hit.

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With a baseball bat.

241
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Exactly.

242
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I know, but that's what I'm worried about too, I think that moment of borrowing a significant amount of money that I know that I can't just pay off If work really hard in a matter of months or a year is pretty frightening. To be like, ok that's, you know, half a million dollars or 400 thousand dollars or something huge.

243
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Not an insignificant amount of money.

244
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I know, so that'll be really interesting, I think, getting a loan and then paying the house and then being like...

245
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And you just sort of take it as everyday life. I mean, it comes out of your account every week or every fortnight. You don't really think about it. You know, you've got the money there for the repayments, but you just enjoy having a home, you enjoy.

246
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That part would be amazing.

247
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You know, decorating, you know.

248
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We can do whatever we you want. I can walk around naked, no one can do anything.

249
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Exactly. Making it your family home and being able to get pets as well.

250
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Exactly, exactly. I guess too, we should mention that working up to finding a house, Kel and I were looking at different suburbs there are a few really good websites, you just type in, you know, 'buy house Australia' or whatever you'll find the websites like Domain, I think, or realestate.com.au.

251
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That's right. And we were just looking in different places and quite often you can, you know, obviously use all of the the search stuff to find things in your price range and we ended up finding a really nice place in Clifton Springs that we're going to put in an offer for, if we get given enough from the bank, and so yeah it's going to be interesting. Looking forward to it. Hopefully that ends up being our house. We'll see, we'll see, fingers crossed.

252
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Yeah, I've got my fingers crossed for you, it's pretty cool.

253
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Anyway, Jimmy, anything else to add before we finish up?

254
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Nothing, nothing really off the top of my head. It's a bit of a daunting process, but it's something, I think, if you've got the ability to save for a deposit, if you've got someone that can go guarantor, you've just got to do it.

255
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Yeah. Unfortunately that might not apply to many of you guys, unless you are young children with parents who are immigrants living here in Australia, because you have to sort of have that equity built up in the country first and, you know, if you already have the equity built up, or you already have savings, there's no real need to yourself to go to get a guarantor, right? Hopefully, hopefully there's been a lot in this podcast that'll help you, but yeah, anyway, thanks for you  coming on. It's been a while.

256
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It has been a while.

257
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Go check out Jimmy's other interviews with me because he did a few, right? We did ones on cars, on coffee culture, beer culture.

258
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Yep we've done...

259
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Selling and buying cars in Australia, So there's a whole bunch of interviews on the podcast that should help you if you're looking to buy a car, sell a car, you want to know more about beer and coffee culture, that sort of stuff go check him out.

260
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Sounds good.

261
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Alright. Thanks Jimmy.

262
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Thank you, Pete.