Browse Forums Home Finance 1 Oct 06, 2017 2:12 pm Just wondering if someone with finance knowledge can help me not make a huge mistake. My husband and I would like to buy a house and land package in Sydney's south west for $685K. We have a combined income of $180K and credit card limit of $15K. After paying stamp duty on the land we will only have 60K deposit so will get stuck with considerable LMI. I have been in the same job for 11 years and husband in the same job 10 months. Taking the plunge from renting in Sydney to paying mortgage doesn't seem too big right now (currently pay 640 per week) but repayments will def start to hurt once interest rates inevitably rise. We would also like to have kids in the future. I would obviously like to get something cheaper for a first home but there doesn't seem to be anything much cheaper at all. Are we over committing? Thank you so much for any insights offered. M Re: First home buyer- over committing on finance? 2Oct 06, 2017 5:16 pm Go to the bank and ask for a loan, if they give it to you you should be Ok but if you then have to go to the broker you probably can't afford it. There are no guarantees in the future. About 10 years ago I did pre purchase inspection for a lady (madly in love with a house), house was 300k but needed 50K spend (it was a dog) She did not have the extra 50K and I think she walked. The house is now 900k Could she have bought it and put up with it? Thake your chances , the world belongs to the brave and foolish. If you want guarantees and no risk you will still be looking in 10 years time at a property train that is further and further away from you. In property even a dog is better than no dog and change yourself to meet the challenge. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: First home buyer- over committing on finance? 4Oct 06, 2017 6:22 pm You will be far better off if you can get into the property than not but you must have reasonable chance of servicing the loan. So if you can, get on the bus. Property values are rising faster than ability to save so you need to get in (how many years would my lady client need to save 600k on a teacher's income?) Even if your first propery is nothing flash its a good stepping stone to something better in the future. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: First home buyer- over committing on finance? 5Oct 06, 2017 7:32 pm Marco83 Just wondering if someone with finance knowledge can help me not make a huge mistake. My husband and I would like to buy a house and land package in Sydney's south west for $685K. We have a combined income of $180K and credit card limit of $15K. After paying stamp duty on the land we will only have 60K deposit so will get stuck with considerable LMI. I have been in the same job for 11 years and husband in the same job 10 months. Taking the plunge from renting in Sydney to paying mortgage doesn't seem too big right now (currently pay 640 per week) but repayments will def start to hurt once interest rates inevitably rise. We would also like to have kids in the future. I would obviously like to get something cheaper for a first home but there doesn't seem to be anything much cheaper at all. Are we over committing? Thank you so much for any insights offered. M On the face of it, if you don't have any other debts or liabilities, then servicing won't be an issue from the information given above. Obviously there is more to it than just that, so a full analysis is required to get the complete picture. You mention having kids in the future. To mitigate that you will need to budget and plan for that event and the temporary reduction in income, and make sure you have a surplus to keep up with repayments (though there are lenders that also cater for this scenario with repayment holidays). Being first home buyers, you are entitled to a discount on the stamp duty which is a bonus. The big issue as you say is the hefty LMI you will be charged due to minimal deposit. My recommendation is to come up with at least a 10% deposit as at 90%LVR is where the LMI percentage rate tier increases greatly, so staying under that will save you a fair bit (not to mention lessen the risk to lenders making it easier to get approval). Being a house and land package, settlement might be a fair way away, so it can give you some time to save that extra deposit. Cheers, Tom Re: First home buyer- over committing on finance? 6Oct 06, 2017 10:20 pm Thanks Tom. Unfortunately we don't have enough time between now and settlement to save for stamp duty and another 8k to make10%. Shoot we let this property go and wait to buy? I just worry that land prices are getting very expensive and stamp duty on the land is dead money. What do you think? Re: First home buyer- over committing on finance? 8Oct 06, 2017 11:08 pm If you are comfortable with a higher LVR and LMI, then don't let that deter you. In the end it's your decision to make, and no one else can do it for you. Though I am confused. You mention here in this thread about a house and land package, but in another you are just talking about vacant land? Cheers, Tom Re: First home buyer- over committing on finance? 10Oct 07, 2017 5:36 am The H+L package will be on land that has not registered yet. In the other thread I have mentioned I am nervous about the land component being undervalued by the bank yes. We have to pay deposit for land 5% and deposit for build 5% very soon then at settlement the full amount. We are thinking about moving to s cheaper rental but other than that we are saving to our absolute capacity and don't really want to sell our cars. you were just referred to get advice from your solicitor. This is a legal matter. Separately, why would you use a buyers agent for a house and land package? 3 57692 Not much in this responce. My suggestion is, what are you looking to build and why. This will all be impacted by the local councils planning scheme. Familiarise yourself… 6 5871 So it looks like we finally have some movement on site! Definitely later than expected, but I'll take any progress at this point. I'll drop by over the weekend to get… 5 27737 |