When we shifted to Germany, we had plans to service the mortgage by a combination of rental income and international money transfer from Germany. The house was rented essentially the day we flew out of Australia. This was a very good start. The exchange rate was about 0.65EUR to the aussie dollar. At that time, it was quite feasible for this arrangement to work quite well.
That was in the middle of 2009 when the GFC was in full swing. Fast forward to the end of 2011. The tenants have shifted out to buy their own house, and the exchange rate is at all time time for the aussie dollar at around 0.76EUR. This made is quite difficult for us to keep servicing the mortgage. When we fixed interest rate on our mortgage, we made a simple mistake. It was not the fixing of the interest rate as that was on the increase. It the length of time. We fixed it for four years and it was way too long.
The only that we could really do and be able to sustain some sense of normal life in Germany is to sell the house in Australia. Contribution to that decision are a couple of positives.
Firstly, the housing market is still going strong in Melbourne so we will be getting a bit of profit. We have own the house for about four years, and over that four years, we have made about $30K. It is not spectacular, but it is welcomed.
Secondly, we avoid the hassle of managing the house from Germany. Even though we have an agent looking after the house in Australia, there are still a lot things that concern us. For example, we had to worry about how the marketing is going to get the new tenants, any damage to the house when the previous tenants shifted out etc.
When the house finally got sold, the deadly Queensland flood cause the settlement date to be delayed. The bank that the purchaser used were based in Brisbane and the floods caused the bank's system to be shutdown. I felt pretty bad that I had to impose a penalty on the purchaser as the delay was an "act of god", but I am sure that their bank will pay for the penalty at the end of the day.
3 comments:
I hope the deal went through smoothly, despite the unforeseen setback. How long did you manage the house from Germany before you decided to have it sold? Selling it really seems to be the best solution, as it will help you get stable there. Besides, as you've said, the housing market in Melbourne is strong.
Hey Shane, Thanks for dropping by. We were the property for about 1.5 year while we were living in Germany. In that time, we were nervously watching the Melbourne housing market. At the end of the day, it was getting in the way of us trying the settle into live in Germany, so we sold it.
It’s good to know that you managed to fix your mortgage plan according to your needs. At first it would seem difficult because of the distance. You must be working with a very accommodating company. Yes, I agree with Shane. If you’re still having a hard time managing and have no plans of returning, then you should consider selling it.
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