Need home loan advice
- Thread starter Beauy420
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It's all about the lifestyle/financial security balance. Live within your means people.
If I had my time over again - I'd suck it up and continue living with my parents until I was in a financially sound.
... - I wouldn't have moved out at 16
... - I wouldn't have bought my first house at 19
... - I wouldn't have got married at 22.
... - I wouldn't have had kids at 25.
... - I wouldn't have upgraded my house every few years as my income improved.
I actually worked out the numbers a few years ago - if I'd stayed in the house I first purchased (a modest but perfectly fine 2 bedroom unit near the university) until it was paid off, I would have owned it outright by 25.
If I then add the mortgage payments I actually made from then until now (40), I could have a property portfolio held entirely unencumbered and be able to retire if I wanted. All without touching the bank for a loan.
Instead, I'm still a few years away from being mortgage free (just in time for my children to go through the same). I'm going to do everything I can to keep my children home for as long as we can for their long-term financial freedom.
dustysnecktattoo
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- May 15, 2019
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when it's hundreds of thousands it is
Mikey13G
Club Legend
Most banks are currently offering mortgages of 2.x%, which makes the repayments cheaper than renting. There's always the possibility of interest rates increasing but for the foreseeable future (next 5 years) they are predicted to stay at record lows.
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- #182
I'm always unsure about comments that it's cheaper to rent than own unless its as a very specific part of town. Do you have any data to back that up? The interest portion on typical first homebuyers home loan + cost to maintain the house + taxes is normally more than it would cost to rent. The value with homeownership is building equity (forced savings) and inflation eating away at the value of the debt while pumping up the value of the home.
Normally with lower interest rates come higher house prices, the cash out the door is then fairly static.
- May 5, 2006
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Sounds a bit obvious but depends when you purchased and how much you borrowed. I'm personally much better off paying interest compared to market value rent, but I also didn't buy at the peak and had to stump up a deposit so I'm not paying interest in 100% of the property value. If I wanted to rent an equivalent place I would just have to come up with 4 weeks rent, not a 5-20% deposit.
Please someone help me out. I’m clueless with this stuff.
Hypothetically: Deposit of 120k to reduce the home loan and monthly repayments or deposit of 80k and keep extra thousands in an offset account.
In English please...like really dumb it down for me.
Hypothetically: Deposit of 120k to reduce the home loan and monthly repayments or deposit of 80k and keep extra thousands in an offset account.
In English please...like really dumb it down for me.
120k deposit 100%.
Your loan will be smaller which means your repayments will be too.
Not enough to go on there - but my general thoughts.
1a. Always better to have your cash in your control. Better to borrow more and have offset, than have to ask the bank for help at an undertermined future date (when you may not qualify)
1b. Avoid LMI fees if at all possible. Rest of post presumes both avoid LMI.
1c. Is this property ever going to be investment? Rest of post presumes no, PPoR only.
2. Do you have a savings buffer for emergency? Allow enough for a 'major' repair (hot water cylinder, car repair, etc). You want to be in a position you can just pay cash for any urgent repair.
3. Give yourself a repayment buffer for 'bad luck' (illness, injury, loss of job). Longer the better, but three months is usually a solid start.
4. 2+3 tells you how much you want to keep in savings day 1.
Onto repayments.
5. How much do you pay now? (Rent/existing loan). How much do you save "rain, hail or shine"? Not a stretch target, what you can guarantee making without fail.
6. What are your future income changes? Promotions, retirements, etc. Status quo or increasing income?
7. Calculate your repayments with a reasonable interest buffer - rates won't be this low forever. Usually 1% is enough, most lenders use 2.5%
8. When 5=7, you have reached your comfortable repayment threshold.
Then weigh up what is more important to you.
Appreciate the time and advice mate.
Essentially looking at a property $375ish, plus 20k government fees. So maybe $395k when it’s all said and done. Total savings about half of that, so the decision is whether to put down a huge deposit or put down half my savings, therefore avoiding LMI and still having a solid pool to draw from. I want to live in this house, but it’s definitely not my forever house. Would strongly consider having it as an investment property down the track.
Earning roughly $4k a month (often more), no real chance at going below that, but with the potential to go higher (depending on how much I want work). Have a partner and she would bring in $2.5k a month (again that’s the low side). So financially we’re not going to be under too much stress, even barring major complications, it’s just a matter of larger deposit or smaller deposit and more in offset.
It’s my struggle to grasp offsets that confuses me lol.
Talk to your friends and see if anyone can recommend their broker and have a chat with them.
If you have about $200k in the bank, I'd be depositing at least $175k onto the house. Your loan repayments will be small, and if you're making more than the required payment you could then redraw if you wanted to.
Just about to start building my own place. Dipping into the $40,000 grants. Affordable area so quite comfortable with that. Just the biggest stress is I've talked to everyone I'm dealing with. No one knows anything about the $25,000 builders grant.
Think of it as a rebate for ScoMo's rich mates.
If you can build without it, you get a bonus prize at (after) the end.
- Sep 21, 2004
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Bought a comfy little apartment. Looks like dropped in value by about 30k since I got it. I knew I overpaid by about 10-15k but Im saving a fair bit so happy to wear my loss on end of next loan. Saving a chunk each year. About to fix in at these juicy rates.
kaiserchief13
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Yeah the value has gone down but value has gone down if you buy another place as well
Lord_Flashheart
Chicken Twisty Epicurean
Hopefully this thread isn’t dead. Hasnt seen activity for nearly 12 months.
late first home buyer (over 40) about to sign a contract on a $900k property.
$64k genuine savings
$180k inheritance
$244k in total for those without an abacus
joint income enough to service without issue. Long term stable employment for both. Serviceability (NSR) at around 1.45 based on using 20% deposit. Remainder used to cover stamps, legal etc with some left over to keep for renos (approx 25k)
wife’s credit history is clean
mine has a few too many enquires back in 2018 when we got married but otherwise fine.
very anxious FHB as we have found the perfect home.
what should I look out for?
late first home buyer (over 40) about to sign a contract on a $900k property.
$64k genuine savings
$180k inheritance
$244k in total for those without an abacus
joint income enough to service without issue. Long term stable employment for both. Serviceability (NSR) at around 1.45 based on using 20% deposit. Remainder used to cover stamps, legal etc with some left over to keep for renos (approx 25k)
wife’s credit history is clean
mine has a few too many enquires back in 2018 when we got married but otherwise fine.
very anxious FHB as we have found the perfect home.
what should I look out for?
Sqotty from office works
Premium Platinum
Pregnancy.
Loss of overtime.
Downturn in economy
Loss of job.
Interest rate hikes.
Lord_Flashheart
Chicken Twisty Epicurean
thanks for your comment, good things to consider.
not happening
no overtime considerations.
very strong organisations that will endure downturns
job security is good for both with relatively senior roles.
can cover up to 6% in rate hikes without things getting serious (but would rather not)
Sqotty from office works
Premium Platinum
These are the major mistakes younger people make.
Plus friends telling them 'it will be worth 2 million when you sell it 5 years from now'
''It's guaranteed money'' ''everybody does it'
Plus friends telling them 'it will be worth 2 million when you sell it 5 years from now'
''It's guaranteed money'' ''everybody does it'
Interest rates will never go above 5 percent again Without bringing the whole economy down. So you look well covered.
