If anyone has got a homeloan in the past 3 years you will know they have been assessing your eligibility to pay the loan back based on 7% interest rates. When I bought my first home just in 2012 I was paying about 6% interest rate. I fixed it at the time as I thought it was a bargain. My latest fixing of that loan is still at almost 4% which at the time was a bargain too. And to be clear it is very manageable amount and I know I can easily service that at 7%+.
The issue is I bought that house for a good fair price, and the ONLY reason that house is now worth double is because interest rates are low and ease of credit. It's not actually worth double.
Everyone thinks it's the flood of money coming into the system driving up house prices, it's not. It is purely the fact our banks are giving us 1.99% interest rates now. If your bank was giving you 6% interest rates (which they were in 2012) probably only has you a purchase price capacity relative to an 800k place at 1.99% of about 500k purchase power. So no your house isn't really worth more, it's all fugazi based on interest rates. The massive gap left open is 300k in this case below.
800k loan @1.99% = $2956 per month repayment 500k loan @6% = $2997 per month repayment
If interest rates ever go back to 6% which is very plausible scenario in a few years, then if you've been sucked into an 800k loan you will paying $4796 in your new repayment, a FAR cry from what you thought you were getting into. 30 years is a LONG time. Stay safe
