BUYING MY FIRST HOME

[JJCRU23R]

Id like to pick your brains to seek advice as to how you guys went about buying your first home?

some places online ive read youd probebly need to save 5-10%.. ideally 20% in order to get the best deal for a mortgage.

i know credit history would be taken into account.. and that it can be a long drawn out process.

since ive had a very limited amount of knowledge when it comes to this kinda purchase, id like to know how you guys went about saving the money for a deposit??

how long did it take for you to get the deposit?

after getting a mortgage, what were the lifestyle changes? did it stop you from purchasing other things such as new/bigger car, travel etc?

jase.

Edited December 20, 2009 by mannyMANNYmanny

[jaderd]

Hey mate....good work on getting into it.

Fiance and i got on board earlier this year.

We went with mortgage choice to find best loan to suit needs etc.

were reccomended to him from sister and her friends etc, he owns his own mortgage choice franchise etc and gets same commission from each bank so isnt bias.

We didnt have much of a deposit really and we ended up going with St George who we have found great.

Apparently i have heard that over the last six months banks have pretty much got rid of 100%, 95% and even 90% loans and are making ppl have atleast 10% deposit as an absolute minimum.

Be prepared to have to pay mortgage insurance (doesnt actually insure you at all it is basically lost money and is to cover the bank if you default etc) if you dont have much of a deposit and do not have a guarantoor

The St george loan we have allows a 1% reduction on standard interest rate for first year and currently we have it as a 100% variable loan and are currently at 4.5% approx

I have heard rumors of interest rates rising to 8% in the next two years so i got some advice from my mortgage choice guy, as there job doesnt stop after sign up, i use mortgage choice as a middle man to do things such as lock in % if changing to fixed rate etc.

at the moment lock in rates are around 6.9-7.5% which is a fair bit higher than variable, i always thought that the fixed rate is always 2-3% higher, regardless of variable, although this is not the case, the fixed rate is put together based on the average cariable rate over a given period of time, so therefore if the variable jumps to 7% in the next two years it does not mean the fixed will jump to 9.5-10% etc, so we have decided to hold off on locking anything at moment.

We have a setup with

House loan

100% offset savings account

Credit Cards

so they are all on the online system, basically best case scenario you put all your cash in the offset account and put everything on credit. Any money in the offset is exactly that it becomes offset against the House loan.

e.g

if you have a 300,000 house loan and it comes time for interest to be calculated, if you have 5,000$ sitting in the offset interest is on 295,000$.

so it is very good having an offset and using it correctly, in order to do so basically put everything on credit (fuel, food, bills, dinner out, clothes...etc.) as then the offset can build up over the month and stay full, then at end of month transfer the amount needed out of the offset to pay off credit card, then the cycle starts again, this way you optimize the amount and time that money sits in offset and therefore lowers overall interest.....i only reccomend this if you are good with your cash etc as doesnt take long to have 2-5k on credit card and you want to be able to pay that off before interest hits etc.

good luck, any other q's feel free to PM, alot of this is still fresh in my head as i only went through it all recently.

another tip, dont just go with a conveyancer....they are cheaper but cant offer advice like a solicitor can.

conveyancer might be around 300-500 $ where as my total bill for my solicitor was about 1300$ but they handled soooo much stuff and helped me deal with a few dramas re. buying house off a divorced couple and their cooperation etc. A letter from a solicitor can do alot to make things progress, a conveyancer is limited and cannot give legal advice.....well they can but if you act upon it they are not liable at all

cheers

Lifestyle changes

None really.

i just sold sportivo but that was not as i needed the cash more i wanted to take advantage of low interest rate at moment and get heaps ahead on repayments etc.

i had the sportivo and all other things up until nov which was 8 months of payments.

Basically house reapayments are only about 450$ more per month than renting!!!! so between 2 ppl it is barely noticable

Also having a joint account together now and creditcards has made every thing easier and streamlined as no real "sharing" of cash or taking in turns for dinner etc....just whack it on credit card etc.

so i dont feel it has impacted my day to day living at all, even though i dont have the sportivo repayments anymore i still send that money elsewhere so i dont even see it, bare in mind this is at 4.5% interest.......we would be able to manage no prob even if % went up 3-4 or more, i used to laugh at the news when they said a .25% interest rate rise has forced 5000 ppl to sell.........if you jumped into a house and budgeted that tightly more fool you i say.

all i can reccomend is do your figures and then add 30% and see if you can still cover it.

similar to the sentence about packing for a holiday.

put everything on the bed, then halve your clothes and double your cash, then you are ready to travel :)

Edited December 20, 2009 by jaderd

[1rocky]

Congrats .Went to Aussie home loans. they also recommended St george bank for our investment loan. Needed 10% deposit especially as it is an investment loan and you cannot obtain the first home buyers. most will also take in your first home buyers grant but also like to see a regular deposits put into an account to show that you are saving for a home . You will also not have to pay for stamp duty as a first home buyer. Mortgage insurance might need to be paid for example on a 200,000 loan it costs about 5 000. You would also need a building inspection especially if second hand home. Also Jared has some great advice. Our solictor will cost about $1500. If you can before you go shopping for a house get a pre approval it will help in your budget. We have this and are now looking for a place. hoping to put an offer on one tomorrow. I have found out that if you have no loans it helps more when going for a loan as the banks get iffy when you say you have a car loan. but apart from that no worries and follow Jareds advice.

[jaderd]

Yeah myself and fiance both had 15k car loans when we went for our loan and they didnt have an affect at all.

first home buyers has changed and the changes are rolling out over a period of time, im guessing you have already looked into it as it is a combination of state and federal and they have all changed recently.

when we bought our house it was the 17k first home buyers so yeah it did cover the stampduty and some left over, but yeah bonus amounts have altered

good luck 1rocky on your offer on a house, over the last 6 months around melbourne sale rates are at around 82% which is good....not too many being passed in

Edited December 20, 2009 by jaderd

[JJCRU23R]

ive been looking at some new areas not far from where i currently live and the houses id like to bring up my family in are around 600-800k... would it be possible to get a house in that price range if weve got a combined income of around 80k/year?

realistically how much would i be able to borrow if my wife n i applied? i know it makes more sense to ask some professsional but id just like to ask others based on personal experience before anything else.

thanks for the feedback btw! very interesting read so far..

[1rocky]

thanks Jared

here is a link to borrowing power might give you a rough idea

http://hlc1.westpac.com.au/hlc/hlc/BorrowingPowerSpouse.do

[jaderd]

yeah 600-800k houses with combined income of 80k and with children i reckon would be quite tricky.......i know i would struggle paying for our house repayments on one income.

its like singles trying to crack in to market........300k loan on a single salary would be quite hard....make it a couple and it makes it heaps easier.

[Lawz]

For me I've been saving and spending what I need. Been saving since I started working at the age of 15. I only showed interest in property once interest rates dropped, First Home Owners Grant jumped to 14k and property prices dropped. That was early quarter of this year. I had saved a large proportion with it just accumulating interest in the bank and decided it was time to invest in something worthy. I researched on the internet and also attended a few seminars. Through these seminars I met one of Australia's top brokers/advisors Patrick Cranshaw from Perigee Finance. Top bloke who gave me very good financial advise and guidance towards owning my first home :D.

I've never ever had a loan or credit card. I've been taught well by my parents to spend what you have and only for what you need, not want.

With the broker we sat down and compared all major banks and their offers. I chose the lowest interest rate offer, low bank fees, 100% Offset savings account, credit card with waived fees, at the time... being NAB (they aren't too shabby with customer service after I signed up).

Anyway there have been not many lifestyle changes for me as I still live under a strict rule... Only spend what I have and if I really need it. To date I still have not touched my credit card.

Anyway Jarerd has pretty much explained most of it... and I can't be bothered typing much further LOL.

In my opinion and experience so far, if you are thinking about just saving for just the deposit now, you can't afford it or you'll be in struggle stress town...

There's A LOT of additional fees attached that isn't shown. You won't believe how much extra there is involved. You don't want to dig yourself a hole.

I highly recommend a broker. Especially if you are in Brisbane, QLD... go see Perigee Finance. PM for more details :D

Check out the following links and have a good read. Google more info too.

http://money.ninemsn.com.au/article.aspx?id=100636

http://money.ninemsn.com.au/property/tools...calculator.aspx

http://www.commbank.com.au/personal/home-l...home-loans.aspx

Edited December 20, 2009 by 11TWO

[MT]

Conrats Jase, good move to make.

I too have recently made the same move, and have had similar questions going through my head. Depends on the state you live in also, but if you are a first home owner I believe there is no stamp duty in NSW.

My situation - aged 23, combined income with partner of approx $160k/year, own 2 cars outright, $0 credit card debt

Buying - Block of land for approx $220k, putting 4 bed w ensuite house worth approx $260k.

Went with an ANZ first home loan, variable, lowest interest rate at the time, $0 loan establishment fees. Not an offset account loan.

My partner and I had always been saving just because, but when we specifically decided to start saving we saved up 20% in about 2 years. In the time its taking for the house to be built, we have saved more which is good. 20% is good as you avoid mortgage lendors insurance, but i think currently about 10% is minimum.

We havent moved into the house yet as it isnt build yet, but I dont think our lifestyle has changed much... i dunno, someone looking in might say it has. But just little things add up... taking lunch to work instead of buying, less nights out, cheaper brands of food etc.

I dunno... i guess if you want it that bad then giving up a few things is totally worth it.

I'm with Jaderd too, if you cant afford the rate rise going up 0.25%, you probably shouldnt be thinking about it... I also laugh when the news make a big fuss about it and interview local bogans who complain they cant afford to live but still have enough for the VB and Winnie Blues....

[Mecha-wombat]

jaderd has said it all (I have done exactly the same OFFSET FTW)

I dont think you would have the borrowing power for a house that is 600-900K on 80k combined

I have a combined income of 180K and I would not look for a house in that price range most houses are OVERPRICED for what they are just because of a POSTCODE

We never saved much but we did strike it lucky in the Housing boom when we bought a block of land for 70K and sold it a year later for 180K so we used the money to put a deposit down to buy a house in sydney

Banks look at your saving history, credit history and assests and liabilities

Good luck but I would be looking at a cheaper property to avoid getting knocked back

[SuperDave]

ive been looking at some new areas not far from where i currently live and the houses id like to bring up my family in are around 600-800k... would it be possible to get a house in that price range if weve got a combined income of around 80k/year?

There are online calculators, but the old basic rule is 6 times your income (minus any existing loan repayments) is what you can afford.