Browse Forums Real Estate 1 Jun 01, 2014 2:43 am Straight to the nuts and bolts. My partner and I are looking at buying in Melbourne and have been looking for 9 months. We’ve got about 100k saved, no debt and in mid-range tier jobs. Like a lot of other FHB we have steadily watched with dismay as we’ve seen properties got our heart set on slowly move further and further out of our grasp. We’ve got a budget of ideally up to 650k (but approved for more), and aiming for something that’s within an 8-10km range of the CBD. Moving past that range isn’t an option, as we’d rather just move city or save up more. I’ve wrestled with the fact that it’s a case of either a) taking the plunge, going above our limit or b) or riding this cycle out, saving more and wait for slight downturn or stabilization. I should clarify that going above our limit means to our upper approval, with lenders mortgage insurance this ends up leaving us exposed to mortgage stress once rates rise. Recently, we’ve had a friend who’s moving and selling their 2-bdr apartment in Coburg. The cost of this is significantly lower than houses we've been looking at (480k compared to 650k), the place is quite nice and close to transport and shops and we’ve been tempting to make an offer. We realise there will be less capital growth, but will give us a chance to build equity (we’d still be making repayments of a 650k house, just on a 15-year mortgage amortization). I prefer to notion of a house, with its own title, ability to modify, add value and larger space – but through going to auctions and inspections every weekend observed we can’t afford any that fit the bill. The rundown ones get snapped up by investors and the decent ones sell 120-200k+ over their reserves. The unit then becomes a consideration but I don’t want let the fear of missing out drive such a decision, I’m also concerned that if the market were to take a dive we’d be stuck in the apartment for a long to ride out the correction. Faced with these options, would it be wiser to save more and aim for a house, with more size and it’s own title? Or live in a unit with lower interest repayments and build equity to upgrade later? Re: To build equity? Or ride the cycle? 2Jun 01, 2014 9:59 am You'll hear all differences of opinion on the subject about wether to buy now or wait. In reality tho, no one knows what the future holds. Only you can make that judgement call. I know you've said you want a place 8-10km within the CBD but have you looked a little further out? Re: To build equity? Or ride the cycle? 3Jun 14, 2014 9:16 am I don't know the Melbourne market but in the climate of the lowest interest rsates we've experienced in a LONG time I'd be reluctant to expose myself to mortgage stress. Most people do not consider that impact. They just think "Oh it will only be 2%. BUT say you are paying 5% interest and they go to 7.5% (likely as 7% is average) that's a 50% increase in you interest payments. So your payments have just gone from $480 a week to $721 a week (based on a $500K loan). Think carefully. I've had friends who have lost large property portfolios purely due to overcommitment when interest rates have risen. Re: To build equity? Or ride the cycle? 4Jun 16, 2014 1:43 pm Theorist Straight to the nuts and bolts. My partner and I are looking at buying in Melbourne and have been looking for 9 months. We’ve got about 100k saved, no debt and in mid-range tier jobs. Like a lot of other FHB we have steadily watched with dismay as we’ve seen properties got our heart set on slowly move further and further out of our grasp. We’ve got a budget of ideally up to 650k (but approved for more), and aiming for something that’s within an 8-10km range of the CBD. Moving past that range isn’t an option, as we’d rather just move city or save up more. I’ve wrestled with the fact that it’s a case of either a) taking the plunge, going above our limit or b) or riding this cycle out, saving more and wait for slight downturn or stabilization. I should clarify that going above our limit means to our upper approval, with lenders mortgage insurance this ends up leaving us exposed to mortgage stress once rates rise. Recently, we’ve had a friend who’s moving and selling their 2-bdr apartment in Coburg. The cost of this is significantly lower than houses we've been looking at (480k compared to 650k), the place is quite nice and close to transport and shops and we’ve been tempting to make an offer. We realise there will be less capital growth, but will give us a chance to build equity (we’d still be making repayments of a 650k house, just on a 15-year mortgage amortization). I prefer to notion of a house, with its own title, ability to modify, add value and larger space – but through going to auctions and inspections every weekend observed we can’t afford any that fit the bill. The rundown ones get snapped up by investors and the decent ones sell 120-200k+ over their reserves. The unit then becomes a consideration but I don’t want let the fear of missing out drive such a decision, I’m also concerned that if the market were to take a dive we’d be stuck in the apartment for a long to ride out the correction. Faced with these options, would it be wiser to save more and aim for a house, with more size and it’s own title? Or live in a unit with lower interest repayments and build equity to upgrade later? First of all- congratulations!! Not many would have that amount of savings with no debt. Questions and things to consider: 1. Hard set rules = Heart break 2. Life style choice Vs Commercial choice 3. Will you be having growing family... i. e. 1 or 2 or 3 kids in near future? 4. Do you work in city? Do you take piblic transport or drive to work? 5. Hows your 10 year outlook? Growth phase or will you be in spending phase (travelling etc). 6. Repayment capacity after interest rate hike by at least 3 points over next few years. After you answer above- consider this- buying closer to city doesnt equate to capital growth. Living closer to city does not equate to happy life. It depends on lot of factors. When buying consider schools, hospitals, shopping centres, access to roads and freeways, public transport, demographic (tenants vs home owners and income brackets). These play an important role in capital growth and livability. Hope the above makes sense and good luck with your purchase. Re: To build equity? Or ride the cycle? 5Jun 24, 2014 1:43 pm Can someone share their thoughts on Williams town for purchasing a property to live? Taylors Hill, The place to be! The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19114 Thank you so much everyone. This all makes a lot of sense. I guess when you talk to a builder who butters up everything to look very polished, you get to start believing… 7 17628 Hi We have finally decided to complete a KDR on our corner plot in NE Melbourne suburbs. Given its a corner plot approx. 400 sqm just a standard design may not fit the… 0 8579 |