Buying a House

[Z_K]

I know there is a thread comparing merits of buying an established house or building, but I was after some more general info on buying a house from some on here who seem to have a wealth of knowledge (compared to me anyway, as I know stuff all really).

We will be buying a house. Not interested in building.

I have an appointment with a Mortgage choice dude in a few weeks, but occasionly and surprisingly Bigfooty can be used for other purposes other than talking rubbish about footy and I am after as much info as possible. Can never have too much.

We are 23. Not married but will be soon enough. We have about 55k between us, partly saved mostly inherited. We earn about 110k pa between us, have no debts (credit cards, cars, furniture all clear as of yesterday).

How much should we borrow?

How much should we spend on a joint?

Should I buy at all?

If she cries while we look at places for one whole Sunday because I am flipping out at her map reading ******ation, should I hunt around for another life partner?

Thanks.

 

[The Zebra]

If it is a question of whther to buy a house, I would always say yes.

Despite the fact that the market is flat, despite the fact that the boom is over, despite the fact that you could take that $55,000 and get a better return with a different type of investment - there is nothing like owning your own property, and for that reason you will always get long term growth if you buy in the right area.

It's great to be able to stumble into a wall while drunk and not have to ring the land lord about the hole you made. To (try) and fix things yourself. ******** like that. Plus we are conditioned to aspire to home ownership in Australia - that is not going to change despite the logic that suggests we shouldn't, and this will continue to drive growth.

How much do you spend?

Two questions: how important is lifestyle - 1.being close to the city, etc?, 2.what level of repayment can you meet comfortably? On your incomes you will pretty much be able to borrow as much as you want, but you don't want to be struggling for the money for payments each f/night.

If yu don't care about being close in - you will get a huge place out in Sunbury for not too much money. If inner city life is for you, prepare to go a lot smaller for more money (but also expect much better long term growth - look at the inner city prices in Sydney)

Myself - i prefer inner city. Close to the footy. Short cab rides home from the pub. In the action.

Once you have a price, the big thing when borrowing is the more deposit you have the less mortgage insurance you pay. If you have 20% deposit you will not pay any. if you have 5% deposit you will pay heaps. With your deposit, if you were to buy for $400,000, you could take a 90% loan and would end up paying about $7,000 in mortage insurance, but with the Grant would still have enough to complete the sale.

On the other hand if you bought for $250,000 you would not pay any mortgage insurance at all and would still complete the sale.

Despite the bitter taste of Mortgage Insurance (it has bitten me a couple of times - pr1cks), remember this: A mate of mine had a small deposit about 7 years back and the income to service a loan. his bank manager told him to save for a few years to avoid mortgage insurance. he did and recently bought a place in Fitzroy. He could have bought that place at the time, and for mortage insurance costs he would have paid about $5,000, but would have had capital growth $100,000+ in the time he ended up saving to avoid it.

Have fun looking for a place. jump on the internet, note auction results, don't rush but don't be too cautious. If you make a mistake, ******** it, it's not the end of the world - sell it later and move on. Don't let real estate agents intimidate you - use them against the vendor. Don't let mortagage people charge you anything other the valuation and legal fees (if that). Don't pay more than $500 for conveyancing - they do nothing.

Once you have the house - get foxtel.

 

[Lensen]

Given I work in the home loan industry I probably can't say too much. But I'd strongly suggest (when the MC dude comes out) to make sure he calculates what the repayments will be when the rates are 1.5-2% higher than what they are now, and making sure you still will be able to comfortably service the loan. Too many people are borrowing up to the hilt of what they can afford right now and not taking into account what might happen if rates go up significantly over the next few years.

 

[Z_K]

Thanks guys.

We have been informed that it's best to buy after the comm games. Annoyed the missus a bit, but we will listen to those who know.

 

[orks]

Mate, I would ask for unpaid leave from your job, and take $20k of that $55k, and blow it on a 3 month trip around Europe, starting in July at Pamplona in Spain for the Running of the Bulls Festival in July, then head through Paris, the South of France, Italian Riviera, Rome, Venice, Florence etc, Greek Islands, Swiss and Austrian Alps, Amsterdam, then finish off in Munich for Oktoberfest in late September, and chill out on a beach in Thailand for a week or 2 on the way home.

It will be the best thing you've ever done, and by the time you get home, house prices won't have changed, you'll just have a bit less cash put towards a deposit, but you'll have a heap of great memories to look back on when you eventually do get married and buy a house.

If you can manage to do that trip without your missus, I highly recommend that as well...

 

[Crow-mosone]

Thanks guys.

We have been informed that it's best to buy after the comm games. Annoyed the missus a bit, but we will listen to those who know.

well that's one source of advice you can rule out. IF the comm games were a source ofhouse price inflation - please - then it's already factored in, and probably won't suddenly drop.

But again I'd question the advice of anyone who told you to wait because of this.

What I will tell you, is that unless you plan to grow old in the house, go interest only.

 

[dugrene]

If she cries while we look at places for one whole Sunday because I am flipping out at her map reading ******ation, should I hunt around for another life partner?

Thanks.

Rock solid proof youve been house hunting.


Make sure it's got a shed !

If it is a renovated house pay the extra to get a professional inspector.

Better still....
During the offer and acceptance part make sure once your offer has been excepted you still have the option of a builders report (inspection) that will release you from the contract before settlement if the house has any structural defects or illegal wiring or plumbing.

Check any outbuildings are council approved.

 

[Hamburger]

I understand all the motivations for wanting your own home, but I would think carefully right now.
Just last week the OECD published a report that says Australias house prices are some 50% overvalued. They also went on to say that many Australians are vulnerable to any upward shift in interest rates. They suggest this means the most likely scenario for the period immediately ahead is a downward trend in prices. It is likely rates will rise, employment will fall, and there will be forced sales.
They are not alone in making these forecasts for a downward spiral in house prices...with the falls ranging from 10-40%. This could happen quickly, or it could happen over a longer time frame...no one is really sure, and this is the reason many people are hesitating right now about buying a home.
There is plenty of discussion about this available in the media and really you owe it to yourself and your future wife to take this seriously and explore those discussions before making up your mind.

 

[YOTC]

What you should do is buy a block of land far away in WA (up the coast). And in like 20 years time it will become popular and you would have made tonnes from it

 

[Leper]

If she cries while we look at places for one whole Sunday because I am flipping out at her map reading ******ation, should I hunt around for another life partner?

Yes. Just outsource your sex and spend the money on travelling. Much less hassle and you'll get a whole lot more sex.

 

[kirky]

Given I work in the home loan industry I probably can't say too much. But I'd strongly suggest (when the MC dude comes out) to make sure he calculates what the repayments will be when the rates are 1.5-2% higher than what they are now, and making sure you still will be able to comfortably service the loan. Too many people are borrowing up to the hilt of what they can afford right now and not taking into account what might happen if rates go up significantly over the next few years.

Great advice. I also work in finance and I would recommend that you mix the loans (part variable and part fixed). With the variable loan, get a loan which provides 100% offset and redraw capability - a mix of fixed and variable provides flexibility but also gives you peace of mind re: movements in interest rates. That way you don't need a line of credit which should only ever be for those investing in shares etc. 100% offset and redraw has the same effect as a line of credit but you have a lower interest rate.

Remember - the reason you fix a loan is not because of the interest rate but to have certainty over loan repayments for the duration of the fixed rate period.

 

[Deej]

I understand all the motivations for wanting your own home, but I would think carefully right now.
Just last week the OECD published a report that says Australias house prices are some 50% overvalued. They also went on to say that many Australians are vulnerable to any upward shift in interest rates. They suggest this means the most likely scenario for the period immediately ahead is a downward trend in prices. It is likely rates will rise, employment will fall, and there will be forced sales.
They are not alone in making these forecasts for a downward spiral in house prices...with the falls ranging from 10-40%. This could happen quickly, or it could happen over a longer time frame...no one is really sure, and this is the reason many people are hesitating right now about buying a home.
There is plenty of discussion about this available in the media and really you owe it to yourself and your future wife to take this seriously and explore those discussions before making up your mind.

My opinion is this might be possible in some lesser areas, less expensive less fashionable etc, but in the more affluent and attractive areas prices will never come down. They might mark time for a while but they will never come down. People with money don't get affected by employment issues as much as normal wage earners, and those people will always have the clams to buy the best houses in the best areas.

 

[Crow-mosone]

I understand all the motivations for wanting your own home, but I would think carefully right now.
Just last week the OECD published a report that says Australias house prices are some 50% overvalued. They also went on to say that many Australians are vulnerable to any upward shift in interest rates. They suggest this means the most likely scenario for the period immediately ahead is a downward trend in prices. It is likely rates will rise, employment will fall, and there will be forced sales.
They are not alone in making these forecasts for a downward spiral in house prices...with the falls ranging from 10-40%. This could happen quickly, or it could happen over a longer time frame...no one is really sure, and this is the reason many people are hesitating right now about buying a home.
There is plenty of discussion about this available in the media and really you owe it to yourself and your future wife to take this seriously and explore those discussions before making up your mind.

I wouldn't worry much about the OECD reports.

they've made the same predictions about housing in the UK for years. about as relevant as Eddie McGuire criticising the AFL fixtures

 

[- PC -]

Lifestyle was mentioned and part of lifestyle is also where your work is located. If you work from home then ignore anything further.

Where you live in relation to work is important . If living closer to work costs a little more then so be it. Calculate the cost of a cheaper house 30km away from work and add fuel , parking tyres etc ...does it add up to the difference?

Just another area to look at

 

[Clouds]

Mate, I would ask for unpaid leave from your job, and take $20k of that $55k, and blow it on a 3 month trip around Europe, starting in July at Pamplona in Spain for the Running of the Bulls Festival in July, then head through Paris, the South of France, Italian Riviera, Rome, Venice, Florence etc, Greek Islands, Swiss and Austrian Alps, Amsterdam, then finish off in Munich for Oktoberfest in late September, and chill out on a beach in Thailand for a week or 2 on the way home.

It will be the best thing you've ever done, and by the time you get home, house prices won't have changed, you'll just have a bit less cash put towards a deposit, but you'll have a heap of great memories to look back on when you eventually do get married and buy a house.

This is great advice.
You're 23. There'll be plenty of time for mortgages later.
Although I would add 1 week on the Dalmatia coast in Croatia to that list.

 

[Deej]

This is great advice.
You're 23. There'll be plenty of time for mortgages later.
Although I would add 1 week on the Dalmatia coast in Croatia to that list.

Why stop there, go to Ouro Preto in Brasil too, bloody beautiful place. And definitely go to Bonito, in Mato Grosso do sul, i rate it in the top 3 places i've ever been.

 

[Deej]

By the way punters, I bought a house yesterday!!!

Needs a lot of work and another $150k for an extension, but it's mine, and it's my first (but hopefully first of many!)

 

[Z_K]

By the way punters, I bought a house yesterday!!!

Needs a lot of work and another $150k for an extension, but it's mine, and it's my first (but hopefully first of many!)

Congrats Deej.

I can't wait to get into one, try ot fix it, spend time with the missus at Bunnings and destroying the credit card on sh1t we don't need and spending weekends trying to fix stuff.

Were you looking long?

 

[Deej]

Congrats Deej.

I can't wait to get into one, try ot fix it, spend time with the missus at Bunnings and destroying the credit card on sh1t we don't need and spending weekends trying to fix stuff.

Were you looking long?

About 14mths, made bids at 4 auctions, swore i was never going to another auction ever again after the last when two teams of people were bidding against each other (one husband and wife were actually bidding against each other from opposite sides of the road!). Very difficult to get into the area we wanted, it's such a small enclosed type of area, but it's so good for families it isn't funny. We're very happy with our purchase.

 

[Z_K]

About 14mths, made bids at 4 auctions, swore i was never going to another auction ever again after the last when two teams of people were bidding against each other (one husband and wife were actually bidding against each other from opposite sides of the road!). Very difficult to get into the area we wanted, it's such a small enclosed type of area, but it's so good for families it isn't funny. We're very happy with our purchase.

Righto.

Sounds satisfying. Auctions will be a nightmare. My missus gets attached to houses (even ones we have just looked through once) so when we really get serious I just know there will be tears and tantrems. Mental cases, the lot of 'em.

 

[- PC -]

. My missus gets attached to houses (even ones we have just looked through once) so when we really get serious I just know there will be tears and tantrems. Mental cases, the lot of 'em.

Have you got a checklist of what you want

eg
Close to schools ( providing you want children in 5-8 years )
Close to transport
Close to work
Close to shops
Quiet neighbourhood

Then the house itself
Enough rooms/bedrooms
Enough entertaining space
Shed ( if required)
Position of sun
Street noise
Families or Oldies in street

Ask her to check each one off and not to fall in love with ''charm''

 

[Deej]

Righto.

Sounds satisfying. Auctions will be a nightmare. My missus gets attached to houses (even ones we have just looked through once) so when we really get serious I just know there will be tears and tantrems. Mental cases, the lot of 'em.

A bloke i know from gymbaroo gave me some good advice, he said get to know your local estate agents, even though they're all mostly crooks, try to become friends with them so they want to help you. Ring them all every second day to say hello and just ask if anything new is coming up. If you can get right into their thinking then they might contact you before a house comes onto the market officially and then you can get the jump on everyone else. Hard if they want to auction it but if it's a private sale then they will be willing to give you an inside running if you're their 'mate'.

 

[Z_K]

Have you got a checklist of what you want

eg
Close to schools ( providing you want children in 5-8 years )
Close to transport
Close to work
Close to shops
Quiet neighbourhood

Then the house itself
Enough rooms/bedrooms
Enough entertaining space
Shed ( if required)
Position of sun
Street noise
Families or Oldies in street

Ask her to check each one off and not to fall in love with ''charm''

We have done that, or at least she did, and we are using that list through every place we walk through. It helps, but some places just 'feel' right and we have been through a few that have. She doesn't have the stomach for any of this. I reckon it is great fun, but I am just petrified of ********ing it up.

We know what type of house we are after. We know the general areas in which we would like to live. I don't mind buying a run down joint, but I want it to be something that does not require a builder to bring it to a liveable standard. Have seen a few places that are potentially sensational, but have been ruined by people doing their own renos and causing some major structural damage.

I read that house prices are "certain" to fall further, then read that they have possibly reached their low. Anyone have any theories on the validity of either of those opinions?

 

[Z_K]

A bloke i know from gymbaroo gave me some good advice, he said get to know your local estate agents, even though they're all mostly crooks, try to become friends with them so they want to help you. Ring them all every second day to say hello and just ask if anything new is coming up. If you can get right into their thinking then they might contact you before a house comes onto the market officially and then you can get the jump on everyone else. Hard if they want to auction it but if it's a private sale then they will be willing to give you an inside running if you're their 'mate'.

Dunno if any amount of money is worth speaking to those blokes on a semi-daily basis!! I dunno if they are crooks (most likely) but they are incredibly and astoundingly stupid in my experience.

 

[Footscray_Fan87]

it's a disgrace that some off the richest people in australia, and specifically melbourne and sydney are real estate agents, who haven't studied a day in their life, yet earn more than people with degrees.