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  1. #21
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    TheGooch is online now Winner 2014 - Newbie of the Year
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    Housing affordability is a huge issue in Aus. If you pay more than 30% of your pre tax income on housing, you're considered to be in housing stress. Obviously the lower the income, the bigger impact that 30% has.
    Many people can make it work paying more than 30% and some sources will cite 35% as the figure. But it's something to consider. And the impact of any rate rises

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    Little Ted  (07-10-2014)

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    I would either reiterate your current offer or offer $5k more. I'd also put a deadline on the offer. When negotiating for property you have to either be prepared to walk away or pay asking price. We have walked away a few times and thankfully ended up with properties that were better at a more reasonable price.

    When we bought our investment property we offered during the first open home and said we were ready to sign the contract on the spot. I don't recommend doing that unless you have done your homework, but it does show the vendor you're serious. It's much more tempting to take an offer when a signed contract is in front of them. We knew it was a good price and exactly what we were after so we were prepared to go in strong - but if the vendor had asked for too much we would have walked away.

    ETA - when I'm working (currently on mat leave) our mortgage for the house we live in is about 15% of our pre-tax income. We only owe about half of the value of the house though.
    Last edited by Cue; 07-10-2014 at 21:28.

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    Little Ted  (07-10-2014)

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    Oh I should've pointed out that the 40% was of our take home pay not gross! It would be a fair bit lower when considering gross income.

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    Little Ted  (07-10-2014)

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    I'm working on take-home pay too. Of DH's gross income it would be more like...25% instead of 33%.

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    Quote Originally Posted by ExcuseMyFrench View Post
    @GM01 what would happen if the rates go up to say 7%?
    @ExcuseMyFrench my "maximum" takes in to account contingency for life's surprises, me on PPL only and not my full wage, as well as future rate increases, (although fixing for 2 years means it isn't an immediate concern).

    If you knew me personally you definitely wouldn't need to be asking! I am the planning and mathematics queen ;-)

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    We pay probably 40-50% of our entire income, but our situation is a bit unusual.
    We have a very low income due to DP running his own businesses, and me currently not working. If needed, we could easily pick up more work and pay more.

    I wouldn't go over anything you're comfortable with...as others have mentioned, having a safety net is so important.

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    Little Ted  (08-10-2014)

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    Okay. So we're only able to go a little further - $10k (if the bank approves it - currently in pipeline) and on the proviso of us paying the vendor rent until our house settles (Can we do this? They are looking at renting it out anyway if they don't get what they want). That way we can avoid high fees of a bridging loan and pay it to the vendor instead. Our house should sell fairly quickly as it's a great entry-level house.

    DH and I trying to work out how to word this all this morning for the real estate agent. Any advice still welcome - we've only bought one house before and it was quite some time ago!
    @Elijahs Mum - I value your input if you're out there. Are we able to pay them a 'rental amount' prior to settlement on both houses?




    Last edited by Little Ted; 08-10-2014 at 07:11.

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    Ok - yes you can pay rent prior to settlement. ( or it's technically called a licence fee to occupy the home prior to settlement ) usually paid up front on exchange - so if you agree on say. $400 per week during the. 6 week settlement period you give them $2400 on exchange - so in theory the owner gets some more money, you get a "price reduction " and no stamp duty is paid on the rent ( and you legally have access to the home)

    As pp said the best way to negotiate is have your offer ready and put forward a signed contract , that way the owner knows your serious and as agents it looks so much better presenting the owner with an official document rather than just saying Mr buyer offered $

    Have you mentioned the rent back yet to the agent or did the owner come up with that ?

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    Little Ted  (08-10-2014)

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    Quote Originally Posted by Elijahs Mum View Post
    Ok - yes you can pay rent prior to settlement. ( or it's technically called a licence fee to occupy the home prior to settlement ) usually paid up front on exchange - so if you agree on say. $400 per week during the. 6 week settlement period you give them $2400 on exchange - so in theory the owner gets some more money, you get a "price reduction " and no stamp duty is paid on the rent ( and you legally have access to the home)

    As pp said the best way to negotiate is have your offer ready and put forward a signed contract , that way the owner knows your serious and as agents it looks so much better presenting the owner with an official document rather than just saying Mr buyer offered $

    Have you mentioned the rent back yet to the agent or did the owner come up with that ?
    DH and I were just wondering if it was a possibility - didn't know if it was possible. It would save us money on bridging loan if we could pay 'rent' until our house settles as they are considering renting it back out anyway...and they would get the money instead of the bank, effectively increasing the amount of the house. We haven't mentioned it to the real estate agent yet. Will text DH and see if he has given a response yet.

    Does this sort of thing sound right:

    "We may be able to go $10k higher (waiting on response from bank) on the proviso that we can pay an amount of 'rent' to the owner from a given date, prior to the settlement of our own home. That way we are able to pay owner higher amount for their home in the first place and they would also receive extra money in the form of rent".

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    We just bought and pay 12% of our wage to mortgage

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    Little Ted  (08-10-2014)


 

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