Advice needed – First Home buyer

Hi Kara,

Welcome to the forum.

A deposit bond is basically a substitute for a cash deposit that the vendor receives when contracts are signed. No physical cash actually changes hands, it's basically a document that says you're good for the 10% come settlement time. As it isn't actual cash, the vendor doesn't have to accept it. That's why if you are intending to use a deposit bond, then you should get the approval of the vendor first.

There are a few mobs out there who do deposit bonds, and they charge a fee for them, depending on the time you need it for.

As Shahin mentioned they expire at settlement time, so you would need your finances available by then. Hence nothing stopping you purchasing in March 2013, but you would need a settlement time in July.

Cheers

Tom

I would say they treat you like a leper – they just want more documentation that a PAYG. It is also dependent on how long you have been self employed? More than 2 years? Between 1-2 years or less than 1 year? Also remember that we are heading towards December so stock will be limited. There is no harm waiting until the end of January where there should be more stock coming onto the market. 

Having said that I have a few investors who are putting low offers on properties now and letting the vendor think about the offer over Christmas/New Year.

Either way get your finance sorted as finance usually dictates what your plan of attack will be. Also deposit sounds like a bit of an issue so make sure you negotiate a 5% deposit as opposed to the standard 10%. Since the money doesn't go into the vendor's pocket they generally don't have an issue with you leaving a 5% deposit with the agent rather than a 10% deposit.

What area/state are you looking at?

Regards

Shahin

Hi Kara,

You have saved a considerable amount saved up already. There is no problem in continuing to put money in the FHOG account but perhaps consider putting some money in a separate account (say $5,000) so that you can cover adhoc payments pre settlement such as building inspection, etc. If you are looking to purchase a property for $250,000 then you will require at least $21,000 in deposit plus building and pest inspection which should be around $500 and legal costs of $1,500 so in total that’s approx $23,000.

In terms of being self employed for over a year this is going to be a problem with the LVR you have. You will need to show the bank at least 2 years full financials.

Regards

Shahin