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I ended up suggesting $290k, more as a starting point than anything serious. But they gave a flat no, didn’t come back with a counter offer.
Oh well, will keep saving.
Rowan.
I was going to post a similar question to this one, but this thread gave me some interesting information.
There’s an under-construction property I like — an apartment in a new 6-story — and they have it listed at $360k. I assume that’s higher than they’d accept, but I don’t know how much higher.
Someone suggested I start by offering $100k less, and let them come back with a counter offer to get things rolling, but that seems lot. And someone else told me that not all agents will do counter-offering, especially if you start low.
Seems that there’s probably no standard approach. Every situation is different and if you take the wrong tact it’s just bad luck.
Rowan.
That looks very interesting, thanks for the link.
Rowan.
This is very interesting.
I found a place last week that I can’t afford right now, but will be able to afford by this time next year.
A short (1-2 year) IO loan that then becomes PL looks like it wouldn’t add too much to the eventual total (well, it’s not an insignificant amount, but it’s not an end-of-the-world sort of value).
Yet another variable to throw into the calculations.
Thanks.
Rowan.
I’ve sort of got the impression that the vendors reserve is always higher than the list price, usually by 10%? If the reserve is higher than the list, they’re not going to pay much attention to offers below the list price are they?
Rowan.
I’m looking at a one or two bedroom apartment in Prahran or South Yarra for around $300k.
So the up front fees I’m looking at are:
$60k – deposit
(or)
$30k – deposit
$2k – mortgage insurance$15k – stamp duty + legal fees
$3k – furniture + laundry equipment
$400 – loan manager fees
$100 – building inspectionFees in my favour:
$10k – first home owner grant ($3k? $7k?)
—
Using the Wizard rates (http://www.wizard.com.au/homeloans/firsthome.aspx) as examples, and adding 1.5% to account for variation over the length of the loan, ongoing fees for a 25 year loan would be:
Full doc (6.21% + 1.5% = 7.71%):
$2030/mo – $270k loan
$1800/mo – $240k loanOr low doc (7.14% + 1.5% = 8.64%):
$2200/mo – $270k loan, 7.14%+1.5%
$1960/mo – $240k loan, 7.14%+1.5%$1.5k-$2k/yr – body corporate + sinking fund
$110+usage/yr – water
$550/yr – council rates
$?/yr – home insurance
$200/yr – contents insurance
$200/yr – general maintanenceOngoing fees in my favour:
$600-$1680/yr – car park leasing
—
They’re all just ballpark values, but that’s basically what I’ve worked out to date.
I notice that:
. The minimum repayments drop around $100/mo for a 30yr loan rather than a 25yr one.
. Low doc adds about 1% to the interest rate, which amounts to $150/mo on the repayment fee (pretty substantial).Looks like I’ll be pushing for a full doc loan.
The cost of the mortgage insurance doesn’t look high compared to the rent I’d be paying while I saved my deposit up to 20%, especially if the price of a $300k property increases in that time (which I assume it would).
I’m hearing on the news talk of the base interest rate going up at least once more in the immediate future. Last time it went up 0.25%, so even if it went up twice I assume that wouldn’t mean more than another $80/mo or so on repayments. Not the end of the world.
I wonder how much the interest rate would need to go up to see prices actually drop in the Prahran/South Yarra area. Probably a lot.
—
Mostly just thinking out loud here, but if I’ve made any errors I’d appreciate a headsup.
Cheers,
Rowan.So there’s no standard rate increase for a Low Doc loan compared to a standard one, and no standard LMI fee for a loan of a given size?
They don’t make it easy to calculate if you can afford a big loan. And I keep seeing extra fees pop up that I hadn’t considered.
Doesn’t look like I’m there yet though, and with the interest rate likely to go up again soon so I think I’ll keep building the deposit for a while longer.
Thanks.
Rowan.
