Browse Forums Home Finance 1 Feb 02, 2012 9:57 am I'm new here, so please be nice The holiday period has been good - it's given me time to seriously and properly look at the idea of getting out and becoming an owner. It's been a massively daunting task, who knew it would take so much time!? I'm now knee deep in the buying land (20%?) and picking the plan/builder process (30%?), but now I've started looking at the financing and that's just a world of hurt - I'm scared my brain could implode at any minute. The catalyst for this has been travel time to work. 90% of jobs in my industry are in the CBD or SthMelb. I currently do ~90 mins each way regarless of whether it's driving, train or cycling - 39km. Craigieburn looks like the winner for forward planning - it's not going to be a huge saving, but even if it's 45 minutes per day saved, that's a huge win. A bit about my background and where I sit financially: I'm pretty open with what I earn and my finances, and I'm hoping that can help people give me a better idea of where I sit along the scale of "You're worrying for nothing", "You'll be fine", "you'll manage like the rest of us", "You're overextending yourself" and "You're dreaming" I've recently finished paying off the car loan (in 2 years) - looked at upgrading, decided against it. Essentially, I'm debt free and am owed about $5k. Until now I've been living with the olds, so my costs have been reasonably minimal, though I pay most of the bills and a little rent. I'm sitting on just shy of 84K/pa, and have put $65k aside just for a home loan. (I've also had an expensive cycling and photography habit, which are more of a "well what else am I going to do with all this money?" I'm not looking at anything too extravagant - ballpark I'm looking at 335k, but that's before unstated costs - add-ons, stamp duty, lawyers fees... but overall it's reasonably comprehensive (fittings, clean-up, landscaping included etc). I'm working to see if I can chop 15k off the land price; if I went with a slightly smaller block, I could cut 20-30k off the land price but have to settle for my second or third favorite house layout/design. On a $250k loan at current rates I'm looking at $850/ftnight repyments, give or take. Ultimately the initial questions are: - Where would this cap out to not be high risk? - Where does the point lie with repayments for a single person where you start going "woah, hold on there". - What is the bank going to look at that might make them say "nup, not giving you anything"? - What tips do you have for a single person wanting to own on the costs side of things? Building a Delta 21 at Craigieburn - http://homeofzero.blogspot.com.au/ Deposit: 26/02. Contract: 22/05. Settlement: 29/05. Site start: 18/10. Re: Home buying for individual owner 2Feb 09, 2012 10:58 pm Hi mate, 1. won't comment too much on your financial as i will def need more info...hard to comment on just your annual income 2. With your deposit and your land + build cost at $335k- your LVR will be more around the 85%-88% mark...as you need money for stamp duty( ~2.5% in QLD, NSW, WA, ACT and ~3% in VIC and SA) + fit out + land-scrapping and some $$ for the build buffer. 3. It's alwasy good to be under the 80% mark...but in your case i would encourage you to go to 88% LVr...88% is acutely the best "value" for money in terms of the LMI premium; If the bank approves you at 88% it means you get to keep more of your own cash for another "cost" that can't be financed. Now to answer your "ultimate" questions - Where would this cap out to not be high risk? Low risk ---> under 80% LVR The following can be consider as Medium- high risk --> -Over 80% LVR -Land and house package -Rural or remote location -Owners builders -Black-listed builder -Custom deisgn ( valuation may fall short--- more like normally does fall short ) - Where does the point lie with repayments for a single person where you start going "woah, hold on there". hard to comment without more data. - What is the bank going to look at that might make them say "nup, not giving you anything"? x 100 reason...in fact they won't need to give a reason - What tips do you have for a single person wanting to own on the costs side of things? Instead of calculating on how much your mortgage repayment is at today rate...work on a 3% buffer and see if you can afford the mortgage. + Add in living expense of $1,200 p/m for single person + $1,800 for couple p/m + $500 extra per kid under 18 p/m + $800 for each single adult p/m Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Home buying for individual owner 3Feb 10, 2012 12:33 am You have not mentioned how old you are and where you are in your earning cycle. I think as the above poster mentioned take the make you are allowed to borrow and then work backwards building a budget of your actual spending so you have a rough budget. If you are young and your salary is likely to grow then it may be a case of doing it hard for a couple of years so that you can be more comfortable as your pay increases. Good advice working on a 3% buffer as that would take about 2years for the rate to move up that much. It good to build buffers as that allows for little unexpected happenings. Don't stress about it, just ring a bank or even the kind poster above as they will do a full work out for you pretty quick. Ciao Mark Re: Home buying for individual owner 4Feb 10, 2012 4:57 am My sister in law is in her 20's managed to buy a house no deposit saved. Only 18 months ago and the market has moved a bit on land but look at some of the new areas in Williams Landing (train station going in by next year, also a cycling path goes close to the city), Point Cook only 20kms from the city and new estates have great infrastructure such as optic fibre (I'm on and email list and 3 bed 2 bath town house going for $335'sh), main estates are Featherbrook, Alamanda, I think latest are Parkbrook and Saratoga. So the reason I mention the newer estates is they offer a lot these days but also below is close to what my sister in law did as a first home buyer: * buy in a new estate in early release (prices tend to be lower until demand picks up, currently they seem to have dropped by about $20k in some) * if you can wait, buy land that will not be titled (ready to build on) for 12 months +. Benefit here is you generally will need a 10% deposit on the land only. So at $180k, 18k deposit and the value of the land may go up to $200k etc hers was $150k and went up to $220k in about 18 months. So now she had equity and the bank said she didn't need mortgage insurance. * Plus the home owners grant by reading here it still looks like $20k avail to July 2012 http://www.sro.vic.gov.au/sro/SROnav.ns ... wners?open * Then built a house for about $150k, 4 bedroom. Buying well is going to be the trick so you can manage the repayments, most banks and money sites have mortgage calculators on them as above work out a couple of % more and actually just pay that if you can. Then if it moves you won't even worry about it and be paying your loan off quicker. Re: Home buying for individual owner 5Feb 10, 2012 9:42 pm AussieMark You have not mentioned how old you are and where you are in your earning cycle. I think as the above poster mentioned take the make you are allowed to borrow and then work backwards building a budget of your actual spending so you have a rough budget. 29; my salary hasn't really gone very far since I started working full time; on the other hand I earn more than most people with the same number of years of experience (and am a lot better at my job than most others). It's government, so pay scales are all set - annually I'll increase in pay scale for about another 4 years before I top out - it's about 2.5% per increment, plus whatever the union negotiates for raises across the board. I've switched jobs/contracts quite a bit over the years, I plan to stay in this one long term. I don't particularly want to manage my areas or anything, so the most I might go up is what's currently paid another 10-15k (before inflation) in a role I'm interested in doing. As for where I'm looking - it will in 98% probability be either Highland or Aston. Highland blows the budget, unless they can make a decent offer. Building a Delta 21 at Craigieburn - http://homeofzero.blogspot.com.au/ Deposit: 26/02. Contract: 22/05. Settlement: 29/05. Site start: 18/10. Re: Home buying for individual owner 6Feb 10, 2012 11:49 pm Hi Again, If you know you upper earning potential then you need to make a budget and be real about it. Separate into what is necessary versus discretionary. Its always good to have a little extra discretionary as a treat once in a while is necessary, however you need to eat, pay health insurance, transport etc. The poster above has raised very good points about buying untitled land and you may be able to get something you like there if the suburb is suitable. Cheers Mark Re: Home buying for individual owner 7Feb 11, 2012 11:19 am Great idea on the untitled land........ esp if you bank the say grand a fortnight (your proposed mortgage repayments) it'll not only look good for the bank but you'll have a nice wee slush fund for all those extras Yeah I don't know why I came to a forum. Place is full of wierdos/pedos thought internet may help but I suppose I'll try my luck with someone in person. Cheers. I tried… 0 6447 Hi VK, Think it's worth investing time in an Owner Builder course to equip you with basic knowledge on Australian Building Industry and its regulations. 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