Hey everyone, im very very new to this website, and im looking for some guidance on a situation ive got atm.
Me and my girlfriend are both 23 and brought our first house at the start of the year. We brought the place for $352k and we have a mortgage of $310k, and not much savings. We both are earn around $40-50k each a year as we are both cadets but our wages will double in 2 years when we are finished.
I really like the house we brought, as ive done it up the way we wanted to inside, but my girlfriend has decided that she wants to move closer to the city (Wollongong), to be a bit closer to work.
So my question is, financially, what would be the best options for us, like i would like to keep the house as an IP but dunno if we would be able to buy another place, or do we need to sell it and then buy another one?? Because we cant get the FHOG and we will have to pay stamp duty this time, is it worth buying another place??
We are moving back in with our folks for a year or so soon to save some money.
Any help would be really awesome, thanks
What do you think the bank would value the house at now? Have you meet the requirements of the FHOG?
Is there rental demand in the area of your IP?
If you were to move in with parents, and rent out the property, you may be able to manage. Seeings that you were given the FHOG, you will need to meet the requirements – there is a minimum amount of time that you must live there!
I would suggest, that you:
1. Confirm your FHOG position
2. Get a rental appraisal on your current homeI haven’t got it valued yet but it would be around the $360k mark. We have met the requirements of the FHOG, but because both our names are on the contract we can’t get the FHOG again.
Is the house owned in both names or just one of you?
Financially speaking, if you both earn 40-50K per annum, that would be approx $90K PA, you should be able to afford another property.
We were in your position not so long ago. We have about the same income as you guys do, and are settling on our 4th property next month ish.. (Whenever it finishes getting built)
If I were you, I would do the following (These are based on assumptions that you meet the banks criteria for income)
– Switch the existing property to an Interest Only Loan (if it isn’t already)
– Do your numbers on the current house that you own from Internet agent appraisels
> Verify what the minimum rent for your current house is.
> Verify what your mortgage repayments are per month
> Work out if the Variance between rent vs mortgage payments is viable.
> Based on guestimates. I would be surprised if your payment variance wasn’t less than $1000 per month
Assuming all the numbers stack up. You should have more than enough money to service a new place.Next is the nasty side of things = The Deposit. If you have no savings, then use your current house as the security for the new one.
Shop around for mortgages until the valuation comes back in your favour.
e.g. With my recent purchase. The Big 4 Banks valued @ $520K, I went to RAMS Home Loans Instead. They valued @ $625K
The differences can be quite scary, but shop around with non banks aswell, and you should be fine.With whoever gives you the best valuation. Apply for a pre-approval with them, based on the scenario, that house A is security for New House B. Whatever the pre-approval number happens to be is what you shop for. You obviously need to find a new place that still keeps you financially secure, but at least half the equation is sorted.
Long story short. You should be able to afford a new place. There are ways of bypassing deposits.
Assuming you are not nutty spenders, or aim for a property beyond your means. It is achievable.
Getting a guarantor like a parent would also help the loan process a lot.Hope this helps. This is my first time on this forum also.
Good luck.PC_Melbourne, thanks mate, that was a great reply. I’m don’t have much IP knowledge but I’m trying to learn as much as I can.
Yes, me and my girlfriends name are both on the contract.We were in your position Feb of last year, and bought our first IP aswell. I had to research like a dog to understand what was happening.
Suggested Research & Reading
– Buy copies of API Magazine & YourInvestmentProperty Magazine. Motza pearls of wisdom there.
– Internet Lookups on getting finance in general are very helpful or ‘Finance Strategies’
– PAYG Variance on Investment Properties is a very cool way for ongoing serviceability.
– What your allowed tax deductions to expense on IP
– Understanding Depreciation goes very very far on taxable income.
– The whole buying process has no answers as such. Choose the location, style, income, outgoings etc. I have found studying realestate.com and realestateview.com more than sufficient for a baseline understanding.Obviously there is a tonne of other stuff but this is a good way to start.
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