Browse Forums Home Finance Re: How Much Deposit for Your Home Loan? 61Apr 16, 2009 10:00 pm our deposit will be 57% due to sale of our first home we built in 2002. Built 36sq Plantation "Retreat" on 4460m2 at Spring Mountain, Qld In Living and landscaping.. >>> ... http://retreatspring.blogspot.com Re: How Much Deposit for Your Home Loan? 62Apr 17, 2009 1:22 am Briz Ms ....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door! I saw this sign on a real estate agent's window; Quote: You don't wait to buy real estate. You buy real estate and wait ! Re: How Much Deposit for Your Home Loan? 63Apr 17, 2009 7:43 am Hoffies Briz Ms ....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door! Real estate agents say that. They are often wrong. I was actually quoting a property developer It's worked for me - I am now paying off a home that I probably couldn't have afforded in several years time by the time I saved 20% deposit! This home will allow me to build equity in it to make my way up the property ladder. Renovating a post-war house in Brisbane | On the first rung of the property ladder Re: How Much Deposit for Your Home Loan? 64Apr 17, 2009 7:44 am thlo Briz Ms ....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door! I saw this sign on a real estate agent's window; Quote: You don't wait to buy real estate. You buy real estate and wait ! Perfect! Renovating a post-war house in Brisbane | On the first rung of the property ladder Re: How Much Deposit for Your Home Loan? 65Apr 17, 2009 11:40 am Briz Ms thlo Briz Ms ....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door! I saw this sign on a real estate agent's window; Quote: You don't wait to buy real estate. You buy real estate and wait ! Perfect! One of those simple truths. Imagine if you bought a simple new home in West Sydney for $50,000 in 1987. Now selling for $350,000 and more. Yes I know, someone will come and tell us share market would have yielded more etc... Re: How Much Deposit for Your Home Loan? 66Apr 17, 2009 5:33 pm Briz Ms Hoffies Briz Ms ....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door! Real estate agents say that. They are often wrong. I was actually quoting a property developer It's worked for me - I am now paying off a home that I probably couldn't have afforded in several years time by the time I saved 20% deposit! This home will allow me to build equity in it to make my way up the property ladder. Only time will tell I guess (refering to the Bold part above). Of course for some it will be an accurate adage, but for others it won't be, like the many in parts of Sydney that have seen the values of their properties drop by 40 - 50%. My point really was that the saying is merely a property spruiking line, not a truism. Re: How Much Deposit for Your Home Loan? 67Apr 18, 2009 12:40 am Hoffies for others it won't be, like the many in parts of Sydney that have seen the values of their properties drop by 40 - 50%. Which parts of Sydney saw home values drop by that much and when? Re: How Much Deposit for Your Home Loan? 68Apr 18, 2009 5:16 pm thlo Hoffies for others it won't be, like the many in parts of Sydney that have seen the values of their properties drop by 40 - 50%. Which parts of Sydney saw home values drop by that much and when? Here is the first article (from last year) listed in a google search on the topic. http://www.news.com.au/business/money/s ... 51,00.html Among some of the worst losses, a home in New Cambridge St, Fairfield West, bought for $780,000 in November 2004 sold in July last year for $415,000, a loss of 46.8 per cent. At Bond Place, Oxley Park, a unit bought for $455,000 in August 2005 sold last May for $250,000. At McAndrew Close, Lurnea, a house bought for $420,000 in December 2004, sold last June for $267,000. I bet if those people purchased with high LVR's they would have preferred to hold off with the benefit of hindsight. home loan tips 69Apr 18, 2009 5:55 pm You sound like an educated man Hof, possibly at university level. When looking at extreme examples you should also be familiar with the concept of outliers. When examples being used are markedly different in value from the others we call that an extreme deviation. The effect of these extreme deviations on the average are negligible. You also take a short term view of the property market , which Aussie home buyers don't. Sure if you are a property investor and wished to speculate and bought at the peak of 2004 and sold in a four year period, that's different. Re: home loan tips 70Apr 18, 2009 6:50 pm thlo You sound like an educated man Hof, possibly at university level. When looking at extreme examples you should also be familiar with the concept of outliers. When examples being used are markedly different in value from the others we call that an extreme deviation. The effect of these extreme deviations on the average are negligible. You also take a short term view of the property market , which Aussie home buyers don't. Sure if you are a property investor and wished to speculate and bought at the peak of 2004 and sold in a four year period, that's different. Thanks Thlo, yes I've done a bit of study. In fact I've undertaken post graduate studies in Econometrics, so I'm familiar with the concept you mentioned above. I think we covered that in Year 10 maths. You are quite right that extreme deviations have a minor effect on measures of central tendency. And in raising that point I assume you are saying that the examples are outliers. I'll take you word for it, you are much closer to those areas than I am up here in Brisbane. However, I would add that there are many, many, many more such examples that I was able to discover with about 5 seconds of research. All seemingly in areas of western Sydney, which I understand contains a few people. And as you know from your line of work, the primary method of valuation of property is comparative values. So although others in the street or vicinity of those mentioned above may not have sold, it is not reasonable to draw the conclusion that they wouldn't have declined by similar values. My point in raising them wasn't to illicit a discussion on the merits of residential property as an asset class (I invest in real estate), and I certainly don't take a short term view on the residential property market. My point was that silly spruiker talk is meaningless. Many of the people in the examples mentioned and the thousands like them probably went into their properties with high LVRs and paid plenty for the insurance. Briz Mz said "....and they say the best time to buy real estate was yesterday, the next best time is today.... hence sometimes hedging your bets on low or no deposit loans and copping the mortgage insurance just to get your foot in the door!" And she is right, sometimes it is a good option to take the plunge (although I wouldn't use the word hedging in this context, as it is actually an all or nothing strategy - quite the opposite of hedging), but equally, sometimes it isn't. Inevitably as unemployment deepens over the next year or two, there will be many out there that wished they didn't rely on real estate "truisms", because they are going to have a "short term view of the market" forced upon them. Re: How Much Deposit for Your Home Loan? 71Apr 19, 2009 1:01 am Sorry to hijack your thread but I know both those suburbs and those prices paid would be similar to; Fairfield West house $780,000 = Holden Commodore for $85,000 Oxley Park unit $455,000 = Hyundai Getz $40,000 Those locations are cheap and less desired suburbs in south west Sydney and on the fringe of Sydney (Penrith) and Im guessing bought from *** developer/non bank lender combo in a rebate deal (where they inflated the price and paid cash back to the buyer and the broker made $ thousands from sale of property). These were common during the real estate boom and some major groups were discovered and reported in the papers. My Filipino migrant friend was offered a brand new villa in Mount Druitt for $430,000 and it was a guaranteed No deposit deal from a builder / non bank lender team in Seven Hills. The real value was probably $250,000 at the time. I warned him about the excessive price and he didn't buy it. You may be scratching your head and think how they can get away with this. I wonder how the lenders allowed it. west sydney mortgage broker 72Apr 20, 2009 4:09 am I agree with some of the points made by both Hof and jhome. In terms of comparative values, yes when a mortgagee sale or a distress sale occurs it does affect the values of other properties in the area for up to 6 months as it is used by valuers as one of the comparable sales. We have certainly seen this with Meriton's high density project on Hassall St Parramatta where a couple of fire sales from investors meant other owners were unable to refinance to a bank lender from the vendor finance as the fire sales caused the values of all units to suffer (causing negative equity in some cases). The abundance of new high density developments did not help either. The research topic of losses by first owners of Sydney units has been well reported. However the values did not drop by 40%. At the end of the day though it comes down to extremely inflated prices people paid originally. I don't think the number of people who paid such an incredible price for a Oxley Park unit would be more than a handful (I would bet it was only one). This is where outliers come in. There is no disputing the 2007 resale prices (reported in the article Hoffies quoted) are in line with the market but when people pay too much for new property while getting low interest vendor finance for 3 years believing the developer's story that prices will keep on going up they can't blame anyone else. If you paid $455,000 for a unit (that is if it was the real price like jhome mentioned) at the edge of Sydney when you could have bought a house with 500 sq m land in the same location for much less then you wouldn't blame anyone else. On the issue of paying too much, you can ask any real estate agent, every now and again there will be a property that sells for 30-40% more than similar properties in the neighbourhood and no-one can explain why someone would pay so much when they could have bought the next property for that much less. I think jhome just explained it. Re: How Much Deposit for Your Home Loan? 73Apr 21, 2009 12:50 am thlo Helyn Yes, fair enough, thlo - point taken. However probably still good advice for people to make sure they can afford loans rather than rushing in just because FHOG boost is on offer and then ending up in trouble later. As you say, lending institutions in Australia will probably make sure of it for them anyway Sorry Helyn you were just unlucky to be saying that here. That sensationalist message been played to death by certain interest groups yet no-one can back it up with facts. To give you an indication on how prudent our lenders are, some are assessing home loan applications assuming the current interest rate is 8%, that's almost 3% higher than what it really is. You can see the stress testing in action there in determining borrowing capacity. Sadly this sort of fact never gets reported. And the FHOG Boost is just filling in the gap left by lenders' bigger deposit requirements now, it doesn't let borrowers borrow more than they can afford. I feel vindicated after the front page story on Saturday's Sydney Morning Herald, reporting the same points I made earlier. Funny. first home loan advice in sydney 79Jun 17, 2009 1:08 pm Candylea We have a 2% deposit... 98% loan. No mortgage insurance. Let me guess. Keystart? 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 19109 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35330 In NSW the maximum deposit for building work is 5% until the builder provides HBCF insurance 1 4830 |