Hi everybody,
First time poster here, I was wondering if anybody would be kind enough to give me some advice.
My partner and I (both late 20’s) are thinking about investing in property but are unsure if in our current financial situation it would be suitable. I’ll break it down for you:
Combined income of 120k+ (I’m expecting a 5k pay rise and my partner smaller pushing us closer to 130 by years end)
Mortgage of approx 350k. 18 month old 3×2 house (PPOR) still with some minor things to finish (which we are using extra cash-flow to finish). Based on prices for comparable houses in area value would be between 380-420k.
2 vehicle loans. 1 car with approx 18k left over 5 years, 1 motorcycle with 6k left over 1.5 years. Car is driven daily, motorcycle only weekends. I have a fully maintained company vehicle with fuel provided for work.
No other debts.
Ideally we’d like to invest in the next 12 months, preferably in a house. We don’t have an idea of a particular area yet (a few in mind) but simply want some opinions on whether we’re in a decent spot to contemplate this or should we focus on paying off our personal debts first (obviously we didn’t have investing in mind when we took out the loans). It seems as the market is flat now it would be a good time to buy. Also what is your opinion on how much we should be looking to spend.
Alternatively if anyone could reccommend a financial planner in Perth WA to talk to it would be appreciated.
Thanks,
Chris.HI Chris,
Welcome aboard.
A few random thoughts.
1. Based on the numbers provided you equity available is somewhere between 92% and 83%. If a valuation establishes the property to be valued closer to $380K you would be hard pressed to do anything.
2. Seems you have quite a few financial commitments I would like to see attended to before doing anything else (not sexy I know but sometimes reality is like that).
3. Not sure of the extent and breadth of the renovations and how much 'spare cash' is involved but keep doing these if they are adding value to the property or attending to fundamental flaws in the building.
4. At some stage you will need to start working on your vehicle debts – kill off the motor-bike loan as quickly as possible and then re-direct the current loan repayments towards the car so you get rid of that as soon as possible.
5. Most financial planners are a little biased towards equities and superannuation so any planner you do see will probably steer you in that direction. Is that what you want?Hi Chris,
Derek beat me to it but his advice is very sound. While it 'Technically' may be possible to borrow at the upper end of your valuation you would have to ask yourself if it is sensible. As Derek comments it would be smart to concentrat on eliminating the non mortgage debt. This will also show you that you can fund an investment. If you are unable to pay extra off the small debt then it is a good indication you might not be ready to invest.
Keep records of the payment history when paying off extra on any debt because when you are ready ti invest this will go a long way with a lender when showing cause as to the good risk that you are by showing sound debt reduction.Also, while we do also have financial planners, as Derek righly indicates, they are more for Superannuation, stocks, equities, risk insurance etc. A good licenced credit advisor (Broker) is the one to discuss lending options with.
Good luck on the quest. When it comes to investment it is more about doing it when you are financially ready than if the market is up or down.
Regards
Colin.
Derek and Colin,
Appreciate your thoughts, they probably echo mine in reality so it’s good to get some feedback.
Regarding our current vehicle loans, I didn’t mention that we also had some other debts that we’ve paid off recently (we both made some poor financial decisions before we met when we were younger). We are putting cash into the loans we have still, I imagine the bike can be paid off by early next year, and then we’ll focus on the car. Our spending and budgeting has improved tenfold, where we once struggled week to week we now are doing it comfortably and creating a decent savings account.
The house itself is mostly complete, we just have to put some finishing touches on it (mainly garden, overheads in kitchen and built in linen closet). We will have it complete by the end of the year.
I welcome any other input or comments, I’ll be frequenting the forums for research so when we do take the plunge we’re educated.
Thanks,
Chris.Mate, just remember all records count, the more you can show of a solid repayment history or debt reduction when you apply for the loan, the better your application will look in the eyes of a lender.
Regards
Colin
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