Buying property, HOW?

[Jay84]

The bigger the deposit, the better off you will be. Most banks will lend up to 95% of the property value, however if you borrow more than 80% you will probably be charged LMI (Lenders Mortgage Insurance). This has the potential to be ALOT of money, the higher the loan balance and the higher percentage you borrow, the more it will be.

The killer for most first home buyers is Stamp Duty. This is usually around 5% of the property value depending on which state you live in etc.

I would recommend you pay off your existing debt first. This will greatly increase your borrowing capacity, that extra money would be used to pay off your mortgage. The fewer debts to manage, the less stress. Also, reducing your credit card limit will increase your borrowing capacity. The less liabilities, the stronger the application.

Be careful with brokers. One thing you need to remember is brokers work off commission from the banks. There are MANY other lenders who do not deal with brokers who can offer you a better deal!!!!!

If you want, PM me your income, monthly expenditures (itemised), current loan repayments, credit limit, deposit amount etc etc. I can do an income assessment for you and let you know what it is through my work?

 

[marcmarc]

Go Jay!!

 

[Jonno from ERD]

G'day Gordo,

I'm a little bit experienced with the buy/sell process now. I'm about to sell my second house, and have managed the sale of my parents place a couple of years ago too.

If you don't plan on living in a place forever, make sure you purchase a house that other people like, as you want to be able to sell it for a premium. Unique, one off houses are nice but rarely do they achieve their potential. Things like where the sun shines, drainage, access to the backyard, age of the wiring/plumbing etc are all key factors that many people forget to think about until it's too late. Look past the fresh coat of paint and quickly put together gardens and look at what the house really offers. We made a 60% profit off our first place (bought it when I was 19!) and am about to put mine on the market for what will be an approximately 35% profit but significantly more profit than the first.

 

[gavman]

Waruikazi, good on you for getting to this stage.

If you are renting the property for the first two years you will have different loan options as an investor (e.g. interest only) – these can be changed for when you want to occupy the property. Also there are conditions associated with the first home buyer’s grant that may be affected. If you decide to build and then rent, I believe that you are entitled to claim the GST associated with the building costs. The list goes on.

Start with a mortgage broker who can provide you a lot of information to get you started and clarify your options. A good mortgage broker will be able to organise all aspects of purchasing the property including legal networks to handle the conveyancing, inspections etc. Tips on finding a good mortgage broker http://www.moneybuddy.com.au/home-loans/guide-mortgage-brokers.html

Remember there is nothing stopping you from getting information from other lenders.

Your bank should provide you with free financial advice to get you started. You may also make an appointment with a financial adviser that is independent to the bank if you want.

I agree with Jay
“I would recommend you pay off your existing debt first. This will greatly increase your borrowing capacity, that extra money would be used to pay off your mortgage. The fewer debts to manage, the less stress. Also, reducing your credit card limit will increase your borrowing capacity. The less liabilities, the stronger the application.”

I was really surprised by the difference in reducing my credit card limit

Check out information in the NT Gov website about buying a property.
http://www.nt.gov.au/ntg4/Subject?documenttitle=*&myLevel=7&myRefPoint=cn=People and Community,cn=Life Events,cn=Buying a Property&layout=show

 

[Snowman]

I got my first house when I was 24 in Melbourne. At the time I owed $16K on my car still. It made the mortgage repayments harder having to cover two loans. But still the best thing I have ever done..... 10 years on and no regrets. The sooner you get into the market the better. People who buy their first house after the age of 30 really have their work cut out for themselves. To be comfortable you really want to have your house(s) paid off before you retire. And have a few years of decent income with no mortgage at all.
Good on ya for thinking about a house at the right time in your life mate

 

[Red-Ink]

Get a good conveyor and a good property lawyer... We paid 1200 for their services but it help so much, best part of our money spent in the investment IMO. We had no headaches with the deal they did it all for us. They saved us nearly 15k on the property compare that to what we spent on their services it's quite a good move really.

 

[waruikazi]

How do the lawyers and conveyancers work for you? What do you need them to do for you?

 

[Red-Ink]

How do the lawyers and conveyancers work for you? What do you need them to do for you?

They handle and look over the property sale contracts.. look after what can and can't be built on the property and basically ensuring you don't get stooged, council regulations all that kind of stuff (the more headaches and work you can pass over to somebody the better mate it's already a very stressfull time buying a house). They also looked at the mortage side of things (well ours did anyway) to make sure the banks themselves aren't trying to put one over us.
Don't ask me how ours did it but for some reason they managed to knock out 15k of the price....
There's was also some left over crap from the previous owners on the property that they refused to get rid off and said it was our onus to get rid of them when we were dealing with their agent. One call from our lawyers and they went and cleaned it up lol.

 

[Renenet]

Don't ask me how ours did it but for some reason they managed to knock out 15k of the price....

Wow, they paid for themselves several times over.

 

[waruikazi]

Big word out to Jay for the phone call and advice! Good to have a friend on the inside and in the same boat. I had no idea about all the other fees and charges!

 

[Jay84]

Big word out to Jay for the phone call and advice! Good to have a friend on the inside and in the same boat. I had no idea about all the other fees and charges!

Thanks Gordo! I hope you can work something out in regards to the LMI (Lenders Mortgage Insurance) and Stamp Duty. With you not paying rent you can save hard for the next 6 months or so. You will surprise yourself what you are capable of.

My plan is to save over $1000.00 a fortnight until the end of the year. This will give my deposit a boost of over $9000.00 by end of December. The house i am living in now will be sold early next year then settlement times etc so i should be able to squeeze in another $9k.

SO NO MORE BUYING SNAKES FOR ME!!!!!!!!!! lol

 

[Laghairt]

I think you have enough alredy Jay.

 

[waruikazi]

Thanks Gordo! I hope you can work something out in regards to the LMI (Lenders Mortgage Insurance) and Stamp Duty. With you not paying rent you can save hard for the next 6 months or so. You will surprise yourself what you are capable of.

My plan is to save over $1000.00 a fortnight until the end of the year. This will give my deposit a boost of over $9000.00 by end of December. The house i am living in now will be sold early next year then settlement times etc so i should be able to squeeze in another $9k.

SO NO MORE BUYING SNAKES FOR ME!!!!!!!!!! lol

Haha no more spending on snakes or guns for me! But luckily for me the last bunch of snkaes i got all came for free.


Stamp duty will apparently be covered by the NT gov because i am a first home buyer, even though i probably wont be living in the house and then a few other banks i have spoken to said that if i can find someone to guarantee me for the ammount of the LMI i wont have to pay it and i'm hoping my parents will do that for me!

So there maybe hope for me yet!

 

[Jay84]

Stamp duty will apparently be covered by the NT gov because i am a first home buyer, That is great news! I wish VIC was the same. We can only avoid Stamp Duty if you buy off the plans. Like an apartment that construction hasn't started yet :x even though i probably wont be living in the house and then a few other banks i have spoken to said that if i can find someone to guarantee me for the ammount of the LMI i wont have to pay it and i'm hoping my parents will do that for me! I am sure your parents will go as Guarantor. Well Gordo, it looks like things are looking up for you!!!

So there maybe hope for me yet!

.

 

[big_head]

Having savings in the bank is one thing, what the banks really want to see is savings HISTORY. It has to be clear. Also reduce as much debt as possible, it does affect serviceability significantly.

People have said if you decide to not live in the property initially to invest the money in a high interest savings account. Think of the tax implications depending on your income. with a high interest account you pay tax on interest earnt. With an investment property you claim expenses, which includes interest, on the investment. Added with rent you may only be contributing a tiny portion to the mortgage, or be fortunate enough to make a bit off it. On top of that, you get growth, whether it be short, medium or long term.

As for LMI, it can be capitalised onto the loan, and if its an investment property you can claim it on tax (i think over 3 years?). Good Luck.

 

[guzzo]

Hey Gordo,

There are 3 sure things in life...death...taxes ...and palm fronds.....don't get a place with too many palm trees!!

 

[cement]

What the solicitor does is read the fine print in the contract and lets you know about any little things that might be a bit funny. he also does 'searches" on the property, to check that it is unencumbered and that everything is kosher as far as councils, proper ownership, easements, covenants, etc are concerned.
you don't have to live in the house to avoid capital gains tax when you sell even if you rent it out, you just have to have it as your postal address! ie your "principal" place of residence