Yes, we’re kinda stating the obvious here. But this is going to be a massive reality check for many people.
While there are now LOADS of finance options available for purchasing a Tiny House thanks to Paul’s hard slog over the last year or so, there’s one big thing many people don’t realise.
>>> If you’re purchasing a Tiny House on Wheels (THOW) without land, the maximum available loan term is 7 years <<<
Many people choose the THOW lifestyle because of the perception that it’s a cheaper way of living. And in terms of your utilities and living expenses, it absolutely can be.
It’s pretty standard for us to receive an enquiry for a loan amount of $100,000. It’s a nice round figure, and given THOW prices now, this is the ballpark figure most people are looking to spend on their new home.
But do you have a realistic idea how much the repayments will be on that amount?
>> Excluding interest and fees, the weekly repayment amount on a $100,000 loan over 7 years is around $274 <<
And that’s only the BASE COST without taking into account current interest rates etc.
The reality is, because of the shorter loan term, the repayments on a $100k THOW loan over 7 years are comparable to a traditional home mortgage of $400k over 30 years.
You’re effectively borrowing the amount of a small house over the term of a car loan.
That’s a big wake-up call for many people.
HOW DO I WORK OUT WHAT I CAN AFFORD TO BORROW?
Use a free online repayment calculator like the one at moneysmart (try a Google search). Enter your desired loan amount over 7 years. Our rates start from 5.99% ** for secured asset finance, so I’d use that as a starting point.
If your head explodes after your first try- keep amending the loan amount til you find a repayment figure you’re comfortable with.
THEN you can hit us up for a serious chat so you can go shopping for your perfect home.
The Team at Great Escape
DISCLAIMER * All info provided is of a general nature and does not take into account your personal financial situation. Please consult a registered financial professional before making any financial decisions. ** Subject to lending criteria, terms and conditions
