First Home Buyer - Advice Please

• 

  CyberMurning on 22/07/2016 - 15:22

  +3

  you are in Melb, yes? i guess if you want house you cant build or buy one in Toorak, so maybe have a look at point cook, there are still few lands (i think so) and there are few developers that can do "home land package turnkey".

  example (this is just example i dont know them)
  http://www.porterdavis.com.au/find-and-buy/house-and-land

  basically they have selection of fixed designed and land, you just pick one and pay one final price until all ready.

• 

  muto on 22/07/2016 - 15:53

  I think you should consider buying an existing house, rather than a brand new one.

  The reason is:
  Land appreciates in value. While houses (and the things that they're made of) depreciate in value.

  If you buy a house that's 20-40 years old, its now depreciating slower than a house that's just been built, but the land is appreciating in value at the same rate. The appreciation in land value offsets the depreciation of the house value, but at a higher rate on older houses.

  I see it as a similar principle as the depreciation on a car: when you drive a new car out of a lot, the value drops significantly. The car may lose 50% of it's value over the first 5 years, but between 5-10 years it only depreciates a further 50%, meaning that it's still worth 25% of original price. Then it depreciated slower over the next 5 years, and so on. Houses have a lot longer life span than a car, but I hope you get my point.

  I'm not an expert in this field, this is just my view on the property market. I'd be happy to hear other opinions.

  • 

    boomramada on 22/07/2016 - 16:36

    -2

    I kind of disagree with that, new house don't depreciate like car, bad example.
    Less maintain works.
    And one day if you rent it, you can claim more depreciation than old house.
    Selling a new house attract more buyers then old house.

    • 

      bemybubble on 22/07/2016 - 16:42

      +2

      Sorry guys but disagree with you both. Location, Location, Location. As long as we are talking about appreciation in value, I'd take the worst house in the best street any day of the week :P

      • 

        boomramada on 22/07/2016 - 16:43

        Lol I'm comparing two houses same suburb, same land size, new and old. :P
        Not, one old house in sydney and one new house in Adelaide ;)

• 

  boomramada on 22/07/2016 - 16:25

  +1

  Even though you are planning to buy your house next year, best way to get these numbers are from a pre approval. You can get a pre approval from a mortgage broker or from your bank. (just tell them you are planning to buy a house in next few months)

  Usual fees are stamp duty, conveyancing fees, property inspection (old house) and mortgage insurance (if you borrowing more than 95% of the property).

  Good luck.

  • 

    Nousernamehere on 22/07/2016 - 19:40

    mortgage insurance (if you borrowing more than 95% of the property

    Don't you mean more than 80% of the property price?

    • 

      boomramada on 22/07/2016 - 19:47

      You are right :)

      • 

        [Deactivated] on 22/07/2016 - 19:54

        Things must have changed in the last 12 years. Some friends of ours about 12 years ago borrowed 110% of the cost of an investment property without having to take out mortgage insurance.

      • 

        Nousernamehere on 22/07/2016 - 19:55

        @pointscrazy:

        Things must have changed in the last 12 years

        Yeah, the GFC :-P

      • 

        djkelly69 on 23/07/2016 - 19:04

        -1

        @Porthos: Mortgage insurance for LVRs over 80% was around long before the GFC…

      • 

        Nousernamehere on 23/07/2016 - 19:29

        -1

        @djkelly69: Did you even both to read what I was replying to?

        pointscrazy said their friend borrowed 110% without mortgage insurance, good luck nowadays a) borrowing 110% of a property's value and b) doing it without mortgage insurance.

• 

  [Deactivated] on 22/07/2016 - 16:42

  How much do you think you will need to borrow?

  Are you planning on a 5%, 10% or 20% deposit?

  Well done for saving $60,000 for a deposit but unfortunately that doesn't go as far as it did 20 years ago for getting a house and land package in an area you want to buy in.

• 

  bemybubble on 22/07/2016 - 16:58

  +2

  Excellent stuff! Glad to see you're having a go.

  Basics first; the banks want to know two things, asset backing (either in cash or security) and the ability to repay.

  Before you go out and look always go talk the bank. Always a good start to go with whoever you do your everyday banking with as a rule of thumb. You will need 20% in cash or equity to secure your mortgage. So in your instance, $60k will finance $300k worth of debt from an asset backing perspective. Then your bank will be able to tell you what you can afford based of your incomes. So lets say for example that they will lend you based off combined income up to $500k, but because you only have $60k in asset backing you can only borrow $300k. If you want to borrow more and it's in your capacity to do so from a servicibility perspective but not from an asset backing perspective, then you will need either a family gaurantee or Mortgage insurance.

  Just to give you an example, I only had $20k to buy my first home and it was worth $350k, so I was $50k short. My parents didn't 'give' me the money per se, they gave me a gaurantee limited to $50k to help with the difference. Now a few years down the track with loan debt reduced and an increase in value I was able to release them of that security and be fully independant.

  With purchasing property if your in Victoria I know that if you buy properties off the plan there are stamp duty concessions available. Unsure as to other states or territories…

  Remember it's all about location, first be comfortable where you want to live and work backwards. Do your research, speak to whomever you need to speak to. Even to this day with exisiting dwellings I always have my builder come through and suss it out for me (Jims Group have a service that does similar if you don't know of any builders).

  Finally if you plan on buying existing dwelling I highly suggest that you get your bank to put in writing what they are willing to lend you. This way you can make offers 'unconditionally'. In simple terms, it means you're ready to rock and roll and don't want to muck around so it's more enticing to the vendor when it comes to bargaining. I made an offer on a home once that was $10k below another offer and the vendor chose my offer over someone else's due to mine being unconditional and the other persons being 'conditional to them getting finance'.

  Good luck! and hope this helps in your search…!

• 

  coolc on 23/07/2016 - 09:02

  Thank you for comments.
  Anything helps with me choosing a loan ? Can we ask for cheaper rate than advertised ?

  Anything need to consider when selecting a block ? Apart from close to schools Sc… Etc ?

  When building ?

  • 

    [Deactivated] on 23/07/2016 - 09:32

    +1

    You can always ask for a cheaper interest rate. It doesn't mean you are going to get one.

    The amount you have in existing loans with the bank and assets held against them will affect what interest rate you are eligible for.

    I've heard of something called the "Wealth Package" with Commonwealth Bank and other banks might have something similar. I'm not sure of the conditions of this package but I think you get a slightly lower interest rate and pay all your bank fees in one yearly payment.

• 

  rambutann on 23/07/2016 - 10:35

  +1

  It all really depends on what you want to do with your life. $2000 per month living costs is quite high and the fact that your partner does not have a full time job may make it difficult.

  I have recently purchased my first property. I was looking at two options when buying, far out and larger (weeribee) or in close and smaller (west footscray). I went with the west footscray option as I have to live in it for at least a year. In addition to this, I will get much better quality Tennant's and more potential Tennant's because the property is closer to the city. Its also positively geared.

  I could have easily bought a house and land package in the suburbs. But I didn't simply because I don't like to work all the time, I intended for this property to be one of many that I procure, I want to travel a lot, and having a house in the suburbs with a larger mortgage, lower quality Tennant's and lower number of potential Tennant's was enough to turn me off.

  In saying this, if you don't intend on leaving your job within the next 5 years then by all means buy a place further out of the city. I would say that the only benefit of a new build is the government rebate of 10k. Besides that, I haven't seen anyone rave about a great turnkey property.

  I personally went from 'eh I might buy a property but I'm traveling for 2 and a half months later in the year' to 'stuff it' and purchasing an already tennanted property to cover the mortgage until I return. Note: you receive the discount on the stamp duty as long as you move in within a year of settlement, you don't have to move in straight away.

  How I went about it? I went to a few properties, got stoked, went to Aussie homeloans to get pre approval, they explained everything I needed to know about loans, I then got in touch with a conveyancer, started passing contracts of sale to my conveyancer for review (this was beneficial as one of the properties had a whole lot of stuff going on that I completely missed..) And then I just made an offer and bam.

• 

  KH on 29/07/2016 - 14:47

  Depend on your situation really…

  Financial wise:
  New Build
  First Home Owner Grant + lower stamp duty (land only).
  More cost, as you will have to start paying bank while construction still in progress. Thus if you are renting, you need to make sure you are comfortable with paying rent + bank repayment.

  Purchase existing
  First home owner stamp duty concession only.
  You can move to your new property straightaway

  but of course there are more to it than just financials….
  example:
  Lifestyle - new construction tend to be further away, existing house are closer to city (or most people's workplace)

  Size / design - your own design vs what is available

  maintenance - let's face it, 20 years old house will have more things to fix than newly build.

• 

  tsunamisurfer on 02/08/2016 - 12:07

  +1

  OP.

  I think before you determine the pitfalls of land buying and the hidden costs of loans, you need to consider how much you wish to spend, whether you can get a loan and how you will service that loan for 25-30 years.

  First of all, how much do you wish to spend to turnkey?

  One of the things that stand out in your opening post is your partner is on a casual income. Many institutions won't consider income of that basis as part of the capacity to service the loan (and hence a big impact on your borrowing power).

  Another consideration is the long term serviceability of the loan. A rough calculation (including your partner's income) suggests your borrowing power is about $320k. Right now with low interest rates (~4%) its just above $1,500 / month.

  Your estimated monthly take home (pay) combined is about $6k. Less $2k expenses / month leaves you with $4k disposable income. $1,500/month repayment is a significant chunk of that $4k.

  Consider that during the life of the 30 year commitment, the interest rate will be able 6% average, although now 4% means it could be above 6% at some point. Pre-GFC it was 8%-9%. At 6% thats another $400 / month gone. Then there are other scenarios like the casual work stopping or having children during the next 30 years.

  These should be foremost in planning before looking at the issues of procuring land.