Just wanting some input into 100% finance mortgages, if you can afford the repayments is it still a viable way to get into the market considering the current market situation?
Im 25 now and dont nessesarily want to wait 2-3 years to save up enough deposit to buy.Can you afford a higher interest rate of say 12%?
If property value drops and you find you cannot afford the repayments you may need to sell the property and end up owing the bank the difference between the loan and the lower house value.
Do you have the hidden costs covered ?
Stamp duty see http://www.sro.vic.gov.au/sro/SROWebSite.nsf/taxes_duties_land%20transfer.htm
for victoria it is different for each state.
and also mortgage insurance and legal fees.
You may find a lender who will cover these costs you will need to ask lender before committing. But this is usually a 106% loanMy question is- would you use a 100% loan considering the current market situation?
How risky is it even if you can afford repayments?If you dont have a deposit then you have little alternative but to consider a 100% loan.
Richard Taylor | Australia's leading private lender
Hi mate
I think it depends on many different things.
What type of strategy are you going to use?
– Buy a normal house
– Buy a new house
– Buy a property 'off the plan' eg. before it is built
– Buy a house and renovate it (not necessarily a big renovation)Probably the real question you need to ask yourself is
"is it a good time to buy this particular investment property"
The general feeling about the market seems to be quite bad but there are definitely good investment opportunities still out there. If you can find one of these then i see no reason why you shouldn't get a 100% loan.
The advantage of a 100% is obviously the fact that you can get into the property market quicker and with more leverage. If you think that you have found a good investment then i see no reason why you shouldn't use a 100% loan.
Cheers Banjo
ps.
Is it your first house?
If you are planning on getting the first home owners grant then you will need to live in the house for 6 months minimum. This can be a great amount of time to do some renovations – and in doing this you will naturally increase the value of the property. This way you might be able to create some equity even if the market stays flat.
duckster wrote:Can you afford a higher interest rate of say 12%?Duckster, not all 100% loans are high rates. St G have one for under 9%.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you can clearly afford the repayments associated with a mortgage of this nature then it is a good alternative considering the current cost of renting.
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