Buying your first house?

[JasmineLouise]

Ok... not really sure how to start this off *as i'm probably dreaming to even consider it*

My DP and i are both desperate to move into our own home *i rent a unit out the back of my uncles main house for a generous $25 a week* and he still lives with his parents.

Im currently unemployed but as im a full time student i get independant living allowance. $320 p/f. My Dp is full time and earning approx 30 k a year

We do have a bit saved up for a deposit but we really have no idea how much we actually need. Is there a set % of the total house cost that must be paid upfront?:confused:

My DP is looking to be promoted by the end of 2006.. and i certainly hope to get another casual job that brings in at least $200 p/w. At the moment there would be no way that we could afford a house, but i was hoping that if the above were to happen, a bank might actually consider it. What are your views? We are happy to live in a 1 bedroom shanty in the middle of nowhere... we just want to get ourselves started, as we both agreed never to rent and pay off someone elses mortgage iykwim.:ecomcity:

Thanks in advance:fingerscrossed:

[Maghan]

I've found that banks will throw money at most people. When we went for our first home loan they wanted to lend us $500 000! We looked at the repayments and knew we couldn't do it. So we looked at what repayments we could afford, then got a pre-approval for that amount and then went looking in that price range.

I told the real estate agents a significant amount less than we actually had to spend because they always show you properties that are $10 000 to $100 000 more than you have... They will always ask you, "so what's your top dollar", lie by about $20 000...

Anyway, go to the bank, tell them what repayments you think you can afford and then let them tell you what they will give you. Should work out good.

[lukaelmo]

We do have a bit saved up for a deposit but we really have no idea how much we actually need. Is there a set % of the total house cost that must be paid upfront?:confused:


Ooo oo I love real estate :smiliedance: .

Normally if you buy a place that is bigger than 45m2, you need a deposit of 10% of the purchase price. Smaller than that you need a 20% deposit. I don't know if this is true all throughout Australia.

I strongly recommend you get a mortgage broker, DP and I have one through realestate.com, and he is helping us borrow money in the smartest way possible. You don't pay them anything, and if you get one you like, trust and are comfortable with, they perform an invaluable service. A good mortgage broker will go through your income, talk you through all the possible loans out there and find the best deal for you. An excellent mortgage broker, as we have, will explain every single detail to you 10 times over, because your (my :D ) brain is very little and can't absorb a whole lot at once.

Good luck!

[maverick]

I like to see young people thinking about buying their home it shows that at least you have a plan for your future.

Like lukaelmo, I also have a passion for real estate but having bought, built and sold several homes I believe the best thing that you can do for yourself is do your due diligence. Don't get so excited about a property that you blind yourself of its faults or shortcomings. Always use your head and not your heart, if there is one thing I have learnt in this game is that the next unbelievable deal is just around the corner.

The property market can be represented by a sinewave, it has its peaks and troughs. Never buy property when the market is at its peak as this is known as a sellers market, always aim to buy property when the market is in a trough which is known as a buyers market. Where is the market at the moment, I hear you say, well it is currently nearing the bottom of a trough. Certainly the over supply of units in the capital cities has developers slashing prices in order to off load their stock.

Now as both you and your partner are currently not in a defacto relationship could prove to be a stumbling block for most banks, banks generally like to see what they refer to as a commited relationship ie you are both living together, sharing bills etc. However some of the non bank lenders are more liberal with their views. Some non bank lenders will actually allow you to borrow 100% of the purchase price, the down side to these types of loans is that they usually attract a higher interest rate sometimes more than 1% higher than normal loans. I know of one company that has what they call a rent buster loan, no deposit required but it is 1% higher in interest rate than normal mortgage rates.

My usual advice is to determine how much you would like to borrow for a mortgage then use a repayment calculator to determine the weekly or fortnightly repayments that would be required to service that loan. Add to this repayment an additional $30 then open a savings account that has no ATM access and between the two of you arrange for your wages to be garnished by this amount between you and deposited into the new account. If you can do this for 3 months without touching that money then you have a better than even chance that you will be able to manage a mortgage repayment. Not only that but you can use this account to show your proposed lender that you can actually make their repayments.

There are so many things to watch for and know about when you are house hunting, one of the traps that a lot of people fall into is when they negotiate a sale price on a property.

For example just because a vendor wants say $300,000 for his house and you bargain them down to say $280,000 and you think you have done a great deal it does not mean that because you have been pre-approved for $300, 000 that the lender will give you the $280,000 to buy the house. What happens is your vendor will arrange to send their valuer around to the house and they will make a valuation on the property, if they come back with a value of only $250,000 then your lender will say that they are only prepared to loan you $250,000 on that house and you will have to find the extra $30,000. That is why when you make an offer on a house or unit that you have a clause written into the contract that states that you will only complete the transaction subject to finance. If you do not have this written into the contract then if your lender says they cannot loan you the required amount and you cannot make up the difference you will be in breach of the contract and you will lose your deposit to the vendor.

I am pleased that you are happy to start at the bottom end of the property ladder and work your way up, it is definitely easier to do it that way. So long as you get a property inspection done on the house and you have this written into your contract as well then you have covered yourself as best you can. You must always have the clause " Subject to the purchasers acceptable outcome of a property inspection." written into your contract. If the property inspection reveals minor work required then this can be used to lower the purchase price, if however it reveals major faults then you can again walk away from the deal and keep your deposit.

Anyway that is probably enough rambling from me at the moment, you should always consult a financial adviser before you commit to any major debt so please do so for your own good.

Cheers

Mav

[Briswegian]

When we bought our place last year, most lenders want at least a five percent deposit but if you have less than 20% then you need to take out mortgage insurance. In the end my dad guaranteed a portion of our loan to avoid this but the bank only did this because they didn't want to lose my business and dads so we just got lucky in that respect.
When you buy, remember there are extra costs like conveyencing, building and pest reports, moving costs, rates, insurance, so do your sums! Brokers (or mobile lenders from your bank) will come out to you at a time that suits you and are happy just to introduce you to the lending market even if you are not ready just yet as they hope to pick you up shortly.
Good luck.

[suemp]

go onto websites like anz home page and follow the home loan sections . they have borrowing power calculators...how much your repayments will be, how much they will loan you based around your earnings, wat you need as a deposist.
good luck

[Mariposa]

very good ideas! although the best way is to get a broker to come out to you, they explain everything fully, and work it all out so u can afford it! GOOD LUCK:thumbsup:

[Indy]

My dp and I just bought a house for $275k. We didn't realise how much all the additional things you need are- solicitors, stamp duty, building inspections, loan fees etc. It ended up costing us around $10 000 of our own money plus the $7000 first home owners grant was used. So about $17 000 all up- just be buy the house. It is crazy. But hopefully worth it. Our monthly repayments are about $1850 and we need to put $150 aside for rates as well.