Hi all
I'm 25, married and my wife and I are expecting our first child in January 2011.
We're really keen to get our first place, and are willing to start off small and simple, say an old 2 bedroom house around 10-12km's from the Brisbane CBD. We are both on similar incomes of approx. $56,000 before tax, each.
The catch is this, my wife wants to take 12 months off work (she is a teacher (not permanent but on a contract)) and I'd like to know if a bank would lend us enough money to cover the cost of our proposed purchase, we will only have a 5-10% deposit (not including the FHOG which we assume will just be consumed by est. costs etc.) on the basis of her being employed presently, and then giving us some flexibility during that 12 month period that my wife is off work and hence whilst on one income. And then repayments returning to normal (or even increased to catch up if required) once shew returns to work the following year.
I am pretty much one step from speaking with a bank or mortgage broker on this issue, but just thought I would get some advice from others before heading in.
I know there are lots of products out there that offer some flexibility for these types of situations but just wanting a bit more information if anyone can help?
Otherwise I guess we just need to wait until she returns to work and then go for the loan then.
I'm not sure if it makes any difference, but we have NO other loans to pay off such as car loans, and have a flawless record in paying off our credit card in full each month before the interest free period expires.
Hi Rafael
Firstly welcome to the forum and I hope you enjoy your time with us.
Couple of ways to tackle the issue:
1) Some lenders actually offer a payment holiday period which varies from 3-6 months dependant on the lvr and how long the loan has been running with them.
2) Look for an interest only loan and place the balance into a 100% offset account and then use the saved funds to support the interest repayments once your circumstances change.
3) Go fo a higher loan to value ration and keep the balance in savings as 2) above.Just need to bear in mind that over 80% you will be charged mortgage insurance and this may well be greater than the $7000 FHOG so may eat into your current savings.
One issue of course with discussing the strategy with a Bank directly is that if they are aware that your wife will be giving up work then very unlikely they will factor her income into the equasion and decline the deal especially if they feel you are unable to support the lending in your own right.
There
Richard Taylor | Australia's leading private lender
Without knowing all your personal details, with education in hand (as you are doing on this site). You are ready for the world of property. I was originally a teacher and understand the flexibility of the teaching industry (I had many periods of paternity leave, unpaid leave etc). Your wife will also be in this position. What I am getting at, is property can be purchased with children and with property.
Thanks for your response Richard.
I will weigh up these options, but it seems I should go and speak with a financial planner to figure out which option is best to proceed. Perhaps we are better off renting for an additional year (the year my wife is off work) and then applying for the home loan.
To be honest i think your average Financial Planner will have no idea and will charge for little or no valid or constructive advice.
One consideration is what do you think Brisbane house prices will be in a years time…. I have an idea and they wont be where they are now.
Richard Taylor | Australia's leading private lender
Lenders will look at your scenario at the point in time you apply for the loan. If you have income enough to service the loan at that point, and everything else stacks up such that you are approved for the loan at that point in time, then what happens after that is your business. Just make sure you can afford the repayments for the new loan.
If that means holding back some of your deposit to cover any time period where income might be scarce, then so be it; lenders just want the loan to be repaid on time every time.
I'd be careful about telling a bank about any plans to stop or change employment after the loan is approved because it could jeapordise your loan approval.
All the best with the purchase and with the little one!!
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