How Did You Buy Your First Home or How Is It Currently Going?

Stargazer5 on 16/07/2020 - 22:35

How did you buy your first home or how is it currently going?
I am curious. I have a lot of discussions with some friends on their financial life in home ownership and retirement plan.
I like hearing stories. Maybe I will learn life experiences from some people and how to continue on from covid 19 times with big housing bubble in Australia. I just really started planning financially in life (one month ago) and thinking about retirement about 20 years later.

I am mid 30’s living in Queensland.
I bought my house 2 years ago. On a Saturday morning, me and my wife went to two banks and got preapproval for $500,000-$600,000. The commonwealth home loan guy asked us to start looking for houses. So during a 1 hour wait for our appointment I looked at serval houses online for sale. When seeing the guy at 2pm, he said I could tell him some addresses and he would get some information about the houses. When driving home at 4:30pm, we went to an auction, our first one together. It was night at 5pm, 30 min to start of auction. Me and my wife joked, if this house is selling for $400,000 or less we would buy it. It was sold for $460,000 three years before. At auction only us (signed up for fun and experience) and another guy. Bidding went to $400,000 and the other guy said he quit. The auctioneer made price for about $430,000 on behalf of the owner and we got house just a few thouands more. My wife was in shock we bought a house on the first house we looked at together under 30minutes. I was in shock too and a bit shaking. Took us a day to decide to buy a house and start looking. And took us 30 min to look and buy a house.

Well, after living two years in it, I like it, the house and land is small but near a serval shopping centres and good restaurants, 12 min walk from train stations And bus stop.. I think God blessed us with the house. We plan to live in it for the rest of our lives to save money for retirement hopefully 55years old?

We have $80,000 saved up for deposite and $100,000 borrowed from in laws.
$300,000 loan. Hopefully pay off bank $200,000 (currently) in 4 years with two jobs. (About $20,000+ in interest in these next 4 years.)
We live off my pay $40,000 a year and save all my wife’s pay for morgage.

It was great because it was a small house, so lower price than $500,000 or other $1 million dollar houses around other suburbs near us. 3 bedrooms and one bathroom.

Financial

Comments

  • Trying2SaveABuck on 16/07/2020 - 22:55
    +4

    I purchased my 1st house at 23

    I worked 7 days a week - 3 different jobs - New Graduate roll (full time) 55k pa, Sub-contractor a few hours a week maybe an extra 100 a week for 3 hours work and my part time uni job at BWS Saturday and Sunday (10 hours on the weekend) - I also often took up extra hours at BWS when called in on public holidays. - i would say i was working well over 55 hours in average a week

    I had 20% + stamp duty however i admit my father gave me 10k to help give me a bit of a early buffer.

    I rented the place out lived at home till i was 25 in which i moved in with my gf (now my wife)

    I paid 294,000 + plus duty for the property (3 bed unit)

    Sold it 4-5 years later

    I look back now and think i worked like a dog and maybe made 1100-1200 a week after tax i dont know how did it. I make more then double that now do less hours now and only work monday to friday (approx 45 hours a week) - i also feel like i do significantly less work..

    Funny how life changes

    • garetz on 16/07/2020 - 23:16
      +2

      Working hard earlier in life sets you up for later.

  • ilikeradiohead on 17/07/2020 - 05:35
    +11

    I'm not a homeowner but what a wild story. I think I spent more time deciding which noise cancelling headphones to buy haha.

    • TChalla on 17/07/2020 - 11:21

      haha or any other purchase that I make (other than Groceries / Food / Alc)

  • ihbh on 17/07/2020 - 07:52
    +1

    You need to look at the economic climate in which people bought their houses over many years, not one or two years. Many bought houses decades ago when interest rates were very high and have fallen significantly since and so the price of their properties increased multiple times. For the people who bought recently when interest rates are at their all time low, guess what will happen when interest rates start to rise again, not to the all time highs, but a higher level than now?

  • Nugs on 17/07/2020 - 07:57
    +1

    Bought a modest house at around 2/3 the price of what we could have borrowed. We were single income at the time.
    I transitioned from FT studying to working, doubling our income.
    Finalised the loan seven years after purchase when wife got a redundancy, which coincided with being pregnant with our third so excellent timing to be a home mum.
    .

  • DingoBilly on 17/07/2020 - 09:05
    +1

    Nothing as dramatic as your story.

    Pretty much just saved up a good amount of money over a few years. Did a fair bit of research and looked at a few places, then came across a property in a great area that seemed slightly underpriced. Put in an offer and it was accepted… That was about 7 years ago and has been great since. Bought when 25 or so, should set me up nicely for later in life.

    One thing that strikes me as interesting is the whole don't listen to the news/gossip type stuff. Even back then people were saying we're in a massive housing bubble and prices are going to crash, but I've made some decent capital gains and the rent has gone up every year so I'm quite happy with it. Of course I might still get some replies here that the housing bubble is inevitable… but I've also bought a second property since then and that has also found similar results.

    Everyone thinks they have some secret inside knowledge but I think it's fairly random to be honest - a pandemic comes along and stuffs everything over, but surprisingly has made my property go up in value for instance (at least, the suburb). Complete and utter luck. As long as you follow basic rules like not borrowing beyond your means and an area that has good services/facilities I think you'll end up fine.

    • Stargazer5 on 17/07/2020 - 20:58

      Haha, yeah, I knew nothing much about economy and loans when I first bought my house. Hopefully everything will work out fine. Bubble is there, but in Queensland where I live, the suburbs are reasonable price. Might fall 10%? Or so but will definitely go up in a few years I think.

  • Archi on 17/07/2020 - 09:13
    +1

    bought first apartment when i was 24 for about 90K as an investment and lived at home bought another apartment 12 years later for 300K and lived in that with the new wife.

    sold first apartment for about 250K to pay off second apartment,

    sold second apartment for 700K about 7 years later and bought a 5 bedroom home and granny flat for 1.3 mil. in a nice leafy suburb.

    sold inlaws town house 800k which was paid off and they now live in the granny flat. and i used the money to pay off current loan.

    now live mortgage free working partime. and spending more time and money on 2 kids. just turned 40

    • Stargazer5 on 17/07/2020 - 20:56

      Wow, nice. It’s great you have mortgage free in such a nice house. :)

    • Cheapskate Paul on 18/07/2020 - 00:20
      +3

      Getting 800k from the in-laws for the granny flat seems like the best part of your investment strategy :-)

  • AlanJ on 17/07/2020 - 09:29
    +1

    That's an amazing story, and everyone who reads this will wish that they were you, but I wonder if you realise just what a chance you took? You said that the Commonwealth gave you pre-approval, and with that "assurance" you went down the street and bid at an auction. Wow! Pre-approval is, frankly, nothing. It is certainly not approval. You don't actually have a home loan until all the papers are signed, both by you and by your lender, and those papers say very specifically that a certain amount of money (not a ball-park figure) is yours. Pre-approval just says that the bank hasn't just taken one look at you and laughed you out of the place, so you can at least go on to the next step. That next step is not to walk down the street and buy a house! I congratulate you on a successful outcome, but I wouldn't want young prospective home buyers to read your story and then go out and do likewise. When you put your hand up at an auction, you are saying that you actually have the money available. What do you think might have happened if, the next morning, you'd got a phone call from that nice guy at Commbank saying that they'd decided you weren't really in a position to buy just yet, so no loan? I don't know what the legal position is at that point, but I'm sure dozens of people on Ozbargain do, and will be able to enlighten you, and me, in the next couple of minutes. You played a very risky game; you pulled it off when 999 others would have found themselves in way over their heads! (Or did I miss something in how I read it?)

    • Fever4shakin on 17/07/2020 - 10:19

      What do you expect people to do if pre-approval isn't enough to go to auction on? do we expect all first home buyers to buy off the plan or look for places with a listed price? (which are in the minority). Do we expect everyone who goes to auction to be loaded with cash to pay upfront? This is the way the banks and real estate market have created things and we're all at mercy of 'the system''.

    • dasher86 on 17/07/2020 - 10:23

      That was hard to read. At least OP separated out paragraphs.
      OP hard in-laws helping - so either way…
      Finance is always at a pre-approval stage until settlement.

    • Stargazer5 on 17/07/2020 - 21:14

      Hmm, well I did bring in all the paper work like job payslips and other documents. I went to anz or NAB before commonwealth. One offered around $600,000 and other was about $500,000. We only needed $250,000 and $300,000 just in case. Back then I thought pre approval was pretty much, approved but not signed.

      I always thought I didn’t have much income or money. Most of my life was thinking to buy a small block of land and build a mini home. But land in suburbs around is not cheap near sunnybank, Queensland. So $400,000 was pretty good price range I think. One of the cheapest around those suburbs.

      The agent who advertised the property said the owner must sell that night. Something related to Gov. yes, it was very silly of us not to calculate much. No idea of interest or repayment amount before buying. Not much relastate knowledge. But thank God it’s not much and we bought at good time Despite house prices dropping. Other houses dropped in price similar to our 3 bedroom one toilet. (Due to our auction? Likely) . Previous owners lost more than $30,000 on principle alone over three years. Very risky, just blessed to love this house more and more.

  • Tenet on 17/07/2020 - 10:56
    +1

    Worked my arse off working full time labor job and studying full time and moved into a house I built when I was 25.
    Had saved nearly $150k since my first job at 18. From memory, my house cost just over $600k to build and now in my early 30's and owing $300k with my wife. I expect it is now worth about $850k.

    I'm so glad I prioritised saving for a house and trying to work as much as I could when I was younger. Im looking forward to paying down as much of the mortgage as possible while rates are low- hopefully by the time I'm 40 I can relax and live life knowing my mortgage is not casting a big shadow over me.

    • Stargazer5 on 17/07/2020 - 21:20

      Congrats. Yeah, I am sick of loans. Lol, hopefully $20,000-$25,000 in interest is all that’s needed to payoff my loan in 4-5 years. But I still think that’s a lot of money even though it’s not a big amount compared to double interest ($250,000 plus interest) in 30 years normal payback plan. Let’s work hard to be financially free!

  • Fever4shakin on 17/07/2020 - 12:59
    +1

    I bought my first home at 27 after a few years of saving (post uni and in a full-time career role). I had help from my parents in that they matched what I saved to make up the 20% deposit. It's been a few years now and it's still going well. I bought a place big enough that I'd be able to "die alone" here comfortably, although I got a dog about a year in and now live with my partner. Since my partner has kids from a previous marriage my place has started to feel small really fast. We're saving to buy or build a bigger place but the prices are a bit intimidating even with both of us in stable full-time employment, plus he loses a chunk of money to child support. I find it kind of funny that by the time we're able to afford our dream house we may no longer need it if the kids are grown-up and moving out.

    • Stargazer5 on 17/07/2020 - 21:24

      Hopefully all goes well for your next purchase.

  • noobplayerz on 17/07/2020 - 13:15
    +2

    Quick background, both of us are migrants and dont really have heaps of savings after having exhausted a portion of it to bring my wife over via spouse visa once I got my PR.
    Approx 4 years ago, my wife and I started to play around the idea of planning for our first house. I did a lot of reading online and play around with affordability calculator to get a ballpark of property we could afford.
    We purchased a land in one of many new estates southeast of Melb, 300+sqm for a tinge above $200k. Our plan is to build a modest house for another $200k with one of the volume builders.
    We faced our first setback when our mortgage broker informed us that we are unable to get approval for $200k after paying 10% deposit for the land. With this information, we brainstormed over a few days and decided to take the risk of committing without pre-approval, naively believe that by the time the land is ready to settle, we would have improved our earning capacities, or on-sell the land if we couldnt settle.
    Lucky for us, the land took a year to settle and by then, both of us are earning more than when we started the journey. Helped by aggressive savings over that 1 year, we ended up having the house built without too much of glitches, within our budget.
    It might seems like an impossible task to enter the property game, but our experience proved it is doable, considering that we did it without parents' support and started the game late compared to a lot.

  • miwahni on 18/07/2020 - 00:20

    Good for you, I'm glad things worked out for you!
    I was 20yo, didn't have a deposit so took out a personal loan through a finance company to provide 5%. The bank I worked for at the time said "no" to a loan, so I walked across the street to the local building society and got the money there. Was gazumped on my first planned purchase (that really hurt!) but the next house I offered on eventually became mine. Sold it three years later for double what I'd paid for it (good luck granted me good timing).
    Cost me $27,500, that house in Springwood NSW. https://www.realestate.com.au/property/32-eastlea-ave-spring… It looks a LOT different now to when I bought it, when it was brand new.

    • Stargazer5 on 18/07/2020 - 11:05

      Hmm, not easy, but good it worked out for you.

  • daft009 on 18/07/2020 - 22:09

    I was single at the time, looking for a townhouse in the 300-350k range.. I'd put an offer in and they would always go for high 300ks

    Suddenly one day, same suburb, full independent block of land 500sqm and an old 3b fibro house on it.. Turns out it was a mortgagee sale and the bank only wanted what it was owed, only 285k.. signed the next day, had 2k more than the 20% deposit in my savings account… Done deal. During the 6wk settlement period the land alone was valued at 350k!

    As the old CBA advert would say.. Equity mate!

    The bank didn't even want any pest or building inspection!

    Rented it out for a few years and then knocked it down/rebuilt when I got married.. Still here today

    • Stargazer5 on 18/07/2020 - 22:51

      Wow, nice. I didn’t think bank would just sell at low price just to get money back. That was a great deal.

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