Hey Guys,
I am a first time buyer, I want to buy a house.
I am very confused about making a decision about going forward for buying a house or not, so thaught of getting expert advise from you guys.
Here is the scenario :-
I am married, we both are working.
I am living at rented property paying $800 as rent money.
I want to buy 3-4 bed room house in melbourne , costing between 300K to 350 K.I want to buy house to save DEAD MONEY going in form of rent.
Now the things which are confusing are
1) I dont have any money at the moment to pay for deposit, If I go for 100% loan, then interest rate will be high. If I go for 95% or 90% loan then interest will be high but it will take me some time to save tht much money. But till the time I try to save 5% or 10% deposit, I will still be paying $800 a month.
My question is, wht kind of loan should I opt for and If I go for 100% loan then will it be profitable ‘cos I am paying $800 monthly as my rent money which is 100$ DEAD MONEY.Please suggest.
Any help or website reference will be highly appreciated.Thnx a ton in advance.
Regards,
PradyPrady,
The interest rate on 100% loans are not actually that high, you can access a wide range of loans at 95% LVR, some of which will allow you to capitalise mortgage insurance up to 97%. These include some of the lowest rate loans on the market.
Regards
Alistair95% and 97% loans are the same rate as 80% or lower loans. The main difference is the mortgage insurance you would have to pay. This article might help…
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Linksthnx Aperry, Mortgage Advisor,
What is the difference in LMI in terms of $$ between 97% and 90%.
I went to mortgage consultant few days ago, he asked me “how much eager you are to buy home”
I said, I can wait any number of months to save deposit money, all I am concerned is , saving $$$ in purchasing a house, ‘cos if interest rate charged is higher than the rent I am paying then I will better save deposit money first.
So, You guys suggest go for home straight away , without waiting to save deposit money.Thnx once again.
Regards,
PradyI won’t advise you what to do as I do not know your personal situation. Renting can be better than living in your own home sometimes if you buy an investment property instead. There are a lot of options.
The difference in LMI in terms of dollars will be around 3 or 4 thousand dollars on a 350k home. It increases exponentially. It could be more or less depending on the lender and whether you actually borrow 97% or only borrow 95% and then capitalise (add to the loan) the mortgage insurance up to 97%.
Either way, you will need to come up with some additional funds for mortgage insurance which could be as high as 3.5% of the loan amount.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHi Prady & welcome to the forum,
Without any savings/deposit & assuming you are entitled to the $12.000 FHOG, you will require 106% Finance,
E.g., based on a $300.000 purchase in VIC including closing costs stamp duty etc but excluding legal fees.
95% finance with LMI capitalized to 97% LVR
Estimated funds required: $30.000 less $12K grant = $18.000100% finance
Estimated funds required: $23.500 less $12K grant = $11.500The rates for 106% finance are approx. 8.55%
Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Hi Steven,
Thnx for your reply.
I am totally new to property stuff and do not have any idea bout this field.
I am an IT professional and searched and found this forum [cap]I have few queries from your post, if U dont mind clearing.
what is additional 6% finance required for?
what do u mean by
“95% finance with LMI capitalized to 97% LVR”I just came across term LMI ( thnx to mortgage advisor) and know what it means and what it stands for , but what is LVR? and what does “LMI capitalized to 97% LVR” stands for?
Estimated funds required: $23.500
where is figure 23,500 coming from?
the confusion is 6% of 300K is 18000 , can u please explain.The rates for 106% finance are approx. 8.55%
but other guys are saying interest rate remains same , and I have heard interest rates as low as 6.55%.PLease clraify.
I am eligible for FHOG grant.
Once again, thnx very much to all u guys for taking out your preciuos time and helping me out.
Thnx.
PradyHi Prady,
The additional 6% is to cover the purchase costs, stamp duty and lenders mortgage insurance.
LMI capitalized to 97%
This is where you add the LMI (Lenders Mortgage Insurance) to the loan,
Some lenders will allow you to increase the loan amount from 95% to 97% LVR to include the cost of lenders mortgage insurance.LVR = Loan to Value Ratio
The estimated $23.000 includes transfer stamp duty, land transfer registration, mortgage registration, and LMI.
Interest rates on 106% finance are higher than 100% finance.
I hope this helps, Cheers.
Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Originally posted by first_timer:I want to buy house to save DEAD MONEY going in form of rent.
Will not the interest repayment (ie an alternative form of DEAD MONEY) be more than double the DEAD MONEY under your current arrangement?
F.[cowboy2]Hi Prady,
LVR refers to leverage, the portion of the purchase that is funded from borrowings.
The additional 6% on a 106% lend is to pay for expenses that incured during the purchase.
The estimated funds required are for costs that you must cover yourself, in the case of a 100% loan this will include stamp duty, LMI etc. For the 95% lend scenario the 5% deposit is also included, but he has allowed for LMI being capitalised.
Regards
AlistairPrady, I think you should make an appointment with a mortgage adviser / broker and discuss your personal situation in depth so you can absorb the knowledge pretty quickly. There is a lot of information to take in and with so many different responses coming, I think it will only confuse you more than anything.
If you are in Melbourne, give Steve a call or email him directly. It will save you a lot of time.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksI want to buy house to save DEAD MONEY going in form of rent.Rental prices are actually much more affordable than the cost of owning your own home.
At the moment you pay a total of $9,600 per annum to rent your residence.
If you get a $350,000 home loan it will cost you aprox $24,500 per annum in interest alone (before you even begin paying off principle). On top of this are the initial non refundable purchasing costs of $20-$30k (regardless of whether these are folded into the loan or not – they are an expense), council rates, water rates, home maintenance rates etc.
There are many good reasons for owning property, but in most areas of Australia “dead rent money” is a bit of a myth as home ownership is so much more expensive.
To be honest, I personally would be looking at a deductible investment property first or a positively geared property to improve cash flow.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHI guys
Like prady I am looking for answers myself as a first timer.We are looking to buy in a mining town as rents are hi and buying is decent.We have 5% deposit plus stamp duty etc.and can have 10% soon plus eligable for FHOG however our local bank are unable to help us without 20% deposit due to not having 6 months consecutive savings due to low deposit and decent income we saved amount quickly.
We want to have the loan in next couple of months and want to know if there is a financial institution out there that doesnt require the 6 months and 20% deposit?We will also hopefully be using this property/plus to start investing in property soon after we have purchased.any suggestions would b appreciated
regards cojah
Even though I am not a fan of buying in mining towns unless the company is very solid and the mine is a long term venture, it seems ok as you will be living there.
A few lenders should be able to help you but you will require to go through the 100% finance lenders. There is a no-genuine savings requirement with a few of these and they self insure so the mortgage insurers should not be a problem.
The interest rate is about 0.8% higher than normal rates but you could always deposit all your funds and the fhog money into an offset on the day of settlement to reduce the loan term or pay the loan down.
I prefer not to divulge the names of lenders as I believe you should use a mortgage adviser / broker if this is your first time.
Hope this helps.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHi Cojah,
With a 10% deposit you may qualify for a 90% non-genuine savings loan,You mentioned you have a 5% deposit plus stamp duty and that you are entitled to the FHOG,
This may be enough to cover your 10% deposit and closing costs, stamp duty etc, on a 90/10 non-genuine loan, Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Hey Steve, you are up late. I think the 90/10 would be a problem as it is a mining town. The mortgage insurers probably won’t go there.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHey Guys,
Thnx for the feedback by all you Great people.
I think Mortgage Advisor it rite,
I should better see a mortgage consultant.
and first save atleast 5% deposit money.
Actually my case is exactly same as Cojah’s
I started working 2 months ago as I was student before and ‘cos of decent salary I can save 5% very quickly.I work as IT contractor, so dont have any permanent job, but do have decent wages, will there be any problem getting a loan?
Regards,
PradyThink “Low Doc” loan.
Hey BorgInvestor,
What is “Low Doc” loan??
can u please provide me with some websites where I can get to know more about these.
Thnx in advance,
Prady
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