You Have To Sell
The Sun Herald
Sunday March 28, 1993
Q I AM a 35-year-old male who has run into difficulties paying off a housing loan. I have not worked full time since being retrenched in July 1991, doing casual work up to last Christmas.
At the end of 91 I decided to change my career and I've completed one year of a four-year part-time course. I bought a new project home in April 88 for$78,000, of which $22,000 was my own deposit.
And now the nasty bit - I have a Home Fund Low Start loan for $58,000 at 13.5pc. My current repayments would normally be $620, increasing by 6pc each December.
My only current income is Jobsearch ($281.90 per two weeks). I pay $152 per month, the difference being made up by mortgage assistance.
I'm now on my second lot of assistance covering a six-month period ending this May. I will then owe Homefund $70,000 loan balance, and $6,565 to the Housing Dept, including $1,410 arrears.
To sell the house, the most I'd get would be $125,000, after legal fees and advertising costs. I calculated I'd come out with $47,000. I have no other debts, the only other asset is $15,000 super in a Westpac ADF. Should I sell my house or try to rent it out ($180 per week)?
According to DSS I'd be eligible for $63 per two weeks rental assistance. If selling, the most likely scenario, should I invest the money in some sort of bank account, or buy, if available, a block of land? I'm confident of rejoining the workforce, but it could take up to a year.
D G, Plumpton
A I WISH I could think of a way to help you keep the house but I think you are correct in your summation.
You obviously must get rid of the loan.
If you could refinance at current interest rates, then you could meet the repayments.
But I cannot see any bank offering you a $78,000 loan, which is what you would need in your current circumstance.
And since you state that you are unlikely to find permanent employment for another year, then it means another year of carrying this growing loan.
Luckily, the home is worth more than the outstanding debt.
I suggest you sell and keep the remaining $47,000 as a deposit for a home once you are re-employed.
To invest with reasonable safety, I suggest splitting it between the GIO and Commonwealth Fixed interest trusts which have no entry fee, although the former has a 1pc exit fee.
© 1993 The Sun Herald