Need home loan advice

[Nuggs Bunny]

First time I've ever had cause to head into the Money board!

I've recently come into a bit of a windfall - I have about a 60% deposit on an apartment I'm looking at.

Problem is I'm from a family of poor people with little history of home-ownership, so I have no idea of the process.

Are there any useful links out there? All I can find on google are banks, and you kind of get held up at the point they want to try and sell you a loan (so you can get info beyond that.)

• What's reasonable for body corp fees for an apartment in Melbourne?
• What should council rates be? The council webpage says 5% of CIV, which is "total market value of the land plus buildings and any other improvements of your property." But that's like 20k a year - that can't be right can it?
• In terms of a loan, how do you go about shopping around? Do you just go to your bank first and go from there?
• How do you go about figuring out an offer?
• If it's an apartment in a new development, will the price be pretty firm anyway?
• And first home owners grant - as far as I can tell my bank does that application for me, right?
• Also, redraw facilities - are they standard with variable loans? I have a little bit more than a 60% deposit - I could probably put another 3-5% in, but I'd really want to have a redraw facility just in case. Are they more expensive than they're worth?
• Given all the interest rate rises over the last 12 months, you'd be looking at a variable loan, correct? Or do people still recommend splitting it to insure yourself against any further rises?
• Where do I find out what insurance I need for an owner occupied apartment in a 100-apartment (new) building?

I know that's a lot, but I don't even really know where to start...

Power Raid got the rest but you're generally looking at around $2k for council rate payments in most jurisdictions of Melbourne. Your body corp fees will come down to what sort of apartment building you're buying in and can vary wildly although I'd say $2k will be around the mark also. The older low rise apartments in places like Footscray/Brunswick/North Melbourne are generally cheaper than the newer ones in places like Docklands or South Melbourne.

Edit: apparently my body corp fees guess is way out of date and $3-4k is the going rate for basic apartments these days

 

[Cruyff14]

First time I've ever had cause to head into the Money board!

I've recently come into a bit of a windfall - I have about a 60% deposit on an apartment I'm looking at.

Problem is I'm from a family of poor people with little history of home-ownership, so I have no idea of the process.

Are there any useful links out there? All I can find on google are banks, and you kind of get held up at the point they want to try and sell you a loan (so you can get info beyond that.)

• What's reasonable for body corp fees for an apartment in Melbourne?
• What should council rates be? The council webpage says 5% of CIV, which is "total market value of the land plus buildings and any other improvements of your property." But that's like 20k a year - that can't be right can it?
• In terms of a loan, how do you go about shopping around? Do you just go to your bank first and go from there?
• How do you go about figuring out an offer?
• If it's an apartment in a new development, will the price be pretty firm anyway?
• And first home owners grant - as far as I can tell my bank does that application for me, right?
• Also, redraw facilities - are they standard with variable loans? I have a little bit more than a 60% deposit - I could probably put another 3-5% in, but I'd really want to have a redraw facility just in case. Are they more expensive than they're worth?
• Given all the interest rate rises over the last 12 months, you'd be looking at a variable loan, correct? Or do people still recommend splitting it to insure yourself against any further rises?
• Where do I find out what insurance I need for an owner occupied apartment in a 100-apartment (new) building?

I know that's a lot, but I don't even really know where to start...

I used to live in an apartment and was chairman of the board for two years - happy to help where I can.

What amenities does the apartment have?

You have to think, body corp fees help maintain the building. Anything with a pool, tennis courts, gym etc will up that price.

Go to a broker, they will definitely help you.

In terms of the offer, what is the asking price? Set yourself a limit, and don't be afraid to say no.

You'll only need contents.

 

[Cruyff14]

Thanks so much for all your help there Power Raid

I guess the obvious follow up question is how do I go about getting a good mortgage broker who is working for me and not for particular banks?

I can recommend you one if you like.

He got us the valuation we needed after going to 6 (!) different banks.

 

[nobbyiscool]

I can recommend you one if you like.

He got us the valuation we needed after going to 6 (!) different banks.

I'd be very happy to receive a PM with recommendations! I think that's the way I'm going to find a good, is through a recommendation.

Thanks

I've been looking on "rate my agent", but all you have to go on are the random ratings and maps that hopefully have properties in your area.

 

[Cruyff14]

I'd be very happy to receive a PM with recommendations! I think that's the way I'm going to find a good, is through a recommendation.

Thanks

I've been looking on "rate my agent", but all you have to go on are the random ratings and maps that hopefully have properties in your area.

Oh, just realised you're in Tassie.

Speak to some friends of yours who own property and they should be able to assist.

 

[nobbyiscool]

Oh, just realised you're in Tassie.

Speak to some friends of yours who own property and they should be able to assist.

I’m not, I’m in Melbourne.

 

[rdhopkins2]

Debt is good, if you’re smart about it.

Exactly this. If you don’t overextend yourself with a mortgage you at least have (hopefully a capitalising) a home to live in at retirement once you pay it off.

Most people will have some form of shares through superannuation whose value should also grow through retirement. Some may take cash out from their home loan to buy shares (that’s a bit riskier).

Definitely don’t recommend the Buy Now Pay Later (BNPL) and it frustrates me to no end when people purchase luxuries with this (if you’ve got extra cash by all means do something fun once in a while, but if you don’t have the cash to pay for it; do you really need it. BNPL is like calling a credit card money- a wolf in sheep’s clothing if not used smartly.

 

[sabre_ac]

Exactly this. If you don’t overextend yourself with a mortgage you at least have (hopefully a capitalising) a home to live in at retirement once you pay it off.

Most people will have some form of shares through superannuation whose value should also grow through retirement. Some may take cash out from their home loan to buy shares (that’s a bit riskier).

I tend to agree that debt isn't a bad thing and buying a house with a mortgage is a good long term decision.

I'd suggest though that being reliant on your home for a stream of income in retirement isn't where anyone should end up. If I had to choose between having a comfortable income in retirement or a paid-off home, I'd choose the comfortable income and rent.

 

[Billy ray]

Howdy
Any finance brokers on here?
Or anyone who has recently taken a loan out for PPOR?
Just wondering which lenders have best deals atm (rates, cashback, offers, etc).
Standard P&I loan,variable, 400-500k, 30 years, with offset, low
Or no fees. Etc etc

 

[Teagueeee15]

Howdy
Any finance brokers on here?
Or anyone who has recently taken a loan out for PPOR?
Just wondering which lenders have best deals atm (rates, cashback, offers, etc).
Standard P&I loan,variable, 400-500k, 30 years, with offset, low
Or no fees. Etc etc

What LVR are you looking at?

There are some low variable rates around at the moment, but they tend to be bait and switch lenders looking to get new customers, who don’t have a history of being long term competitive (eg: Up bank were one of the first movers to go sub 6% recently, with a 5.95% rate and have since increased it).

Timely home loans (backed by Bendigo bank) are consistently one of the leaders in terms of variable rates, with offset being $10 per month. I asked about LVR because Timely and the credit unions will be picky with what properties they have on their loan book.

In terms of cash backs, ME bank still offer them, as do Bank of China and HSBC. A couple of years ago, all the banks had them, but they’ve dried up now.

 

[Billy ray]

LVR of less than 40%.

 

[PenfoldsFan]

Looking for some advice on refinancing, using equity in current PPOR to build again and convert current home to IP.

Signed up through Homestart for current home in Oct 21, $270k townhouse, took 3 years to build, was a nightmare but doubled in value, now worth ~$550k.

Looking to refinance with lower interest rate.
Then use remaining equity to build again in the $700k range and convert current PPOR to IP.
Same build 4 doors down bringing in $500pw rent.

Combined income currently $150k.

Thoughts?

 

[Nothing]

In general you want the investment property to carry the higher level of debt and the PPOR to be the lower level of debt. In this scenario, you would have it the opposite way.

 

[Hamingja]

Yeah if you are an accountant. You might just want to live in a nicer house / area.

 

[PenfoldsFan]

In general you want the investment property to carry the higher level of debt and the PPOR to be the lower level of debt. In this scenario, you would have it the opposite way.

How is that?

I thought refinancing the 270k/borrowing some of the equity, say 225k, and using it as the deposit on the PPOR leaves a mortgage of 495k on the IP.
~90%LVR

Id only need a 475k mortgage on the 700k PPOR.
~68%LVR

 

[Halloween Jack]

How is that?

I thought refinancing the 270k/borrowing some of the equity, say 225k, and using it as the deposit on the PPOR leaves a mortgage of 495k on the IP.
~90%LVR

Id only need a 475k mortgage on the 700k PPOR.
~68%LVR

Its purpose of funds that matters, not the security. In your case the extra $225k would be used toward your OO property and therefore is not tax deductible.

 

[PenfoldsFan]

Its purpose of funds that matters, not the security. In your case the extra $225k would be used toward your OO property and therefore is not tax deductible.

Ok, thanks for explaining that.

Yeah if you are an accountant. You might just want to live in a nicer house / area.

This.

Only its not so much about area or being a nicer house, its about function/convenience.

So to paint the picture, when we decided to build our current house my Wife was on Work Cover and the lenders wouldn't touch her so we could only borrow on my income.
At the time our then 21yo Daughter asked me to go with her to sign up to build a townhouse, again on a single income as her Brother had done 2yrs earlier.

Whilst doing so the agent mentioned there being 1 townhouse left of the group of 6 to sell before the build began, so I spoke to my Wife and we decided to do it as it fit our budget affordability at the time.

As we're in our late 40's our concern going forward is now how we'll go climbing the stairs when we're 60.
The house itself is fine, we love the simplicity and low maintenance, just not sure it'll be ideal as we age.