澳洲Australia property HELP! Can we be homeowners? | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Here’s my situation - do we have any options to own a home?

Our current situation is as follows, we were saving for a reasonable deposit on a home when the GFC struck and we lost our savings…and the chance to get into the property market. We’re currently renting a 3 bedroom townhouse in Ormond (Melbourne) but realise that there’s no real way of owning in this areas as without a significant deposit the sort of loan we would require is just not feasible.

I’m now at a point where I realise that by not owning a home or at least an investment property we are leaving ourselves exposed in later years such as retirement when we will then have no choice but to continue renting.

So we find ourselves in our mid 30’s with one good income (the other on maternity leave) and no savings. I realise a family home is out of the question – mainly because we need to remain in or around the area we are currently renting in. That got me thinking, what about an investment property further out that we could one day move into in retirement when all we would need is a 2 bedroom and being in a particular area is not as critical.

My main thoughts/concerns:

No deposit, but reasonably good income
Not a lot of spare $$ each month to spend each month
Do 105% loans still exist for people with no equity in an existing property?
Are there any strategies I haven’t thought of that could be explored?
Would an investment apartment for eg taken on an interest only loan ever serve the purpose Im trying to achieve (ie. A paid of home in 30 years when we retire)  

评论
105% loans no longer exists. the maximum you will get is 90/95%, and most of these are dependant on you savings 5% over at least 3 months.

How about buying in a regional town, where the FHOG makes up 10 or 15% of the purchase price? After 6 months you can move out and rent the property, for that time you may have to commute, or just live there on weekeneds, obviously still paying both the mortgage and the rent in Ormond, as long as you can show the new purchase is your PPOR.
another option is getting a friend or family memebr be your guarantor, although that isnt the bet option IMHO.
having a paid off house at retirement is a good long term goal, what is the short term goal? how do you get there? I think once you start, your long term goals will change.  

评论
It's great you're thinking about property as a wealth creation vehicle to see you through your retirement!

How much exactly is your one income? When will your partner be going back to full time/part time work?

Can you cut back on anything to increase your savings? ie sell car & get cheaper one, or sell car & make do with one (if you have 2) for 6 months or so, cut back on takeaways to once a month instead of weekly etc, move to a cheaper rental in Ormond or adjoining suburb?

I don't think regional growth compares to inner city grorwth where property is concerned. Have you considered a 1br flat / apartment inner city for around $300K to start your portfolio off with?

If you get an IO loan, I think you should be looking at suburbs that will give you good capital growth & a chance to build up some equity in the property that way. If you go IO on a regional property, the rent may pay for the outgoings of the loan etc. However you may be foregoing tens of thousands worth of capital growth that you will need in further years to borrow against & purchase more property.

Do you want just one home paid off when you retire or could you imagine having a portfolio of 20 that you can live off & not have to rely on things like the pension?

I don't know much about them but I've heard of some sort of cash bonds being used to 'increase' your income with the banks so they will lend to you...probably some info here somewhere on them if you do a search. Not sure how popular they are now & what the pros & cons are though.  

评论
I think you should do everything you can to save up a deposit of at least 10% in as short a timeframe as possible. Budget for everything!!! Rough it for 6 months or however long it takes you because it will pay off.

Anything less than a 20% deposit means you have to take out mortgage insurance which is very expensive (and the name is very misleading, it is NOT insurance it does not protect you against default etc, it is merely a one-off amount you pay to the bank for them to lend you the difference - what I call a very expensive admin fee).

Having said that, there are situations where it would be worthwhile to take out the mortgage insurance, especially if you are keen to get in the market and have not saved up enough. But, personally, I would aim to pay at least 10% for the deposit.

I would look for a property that has potential for capital growth. Very generally, houses have better capital growth than units. Units generally cost less than houses and provide better income (high rent), but the prices dont increase as much as houses.

If you bought a house you might get less rent now but if it has good captial growth, then in a few years time you can get the propety valued by the bank and use any increase in value towards buying another property without having to save for a deposit.  

评论
jigglypuff said: ↑
Anything less than a 20% deposit means you have to take out mortgage insurance which is very expensive (and the name is very misleading, it is NOT insurance it does not protect you against default etc, it is merely a one-off amount you pay to the bank for them to lend you the difference - what I call a very expensive admin fee).Click to expand...
Actually, the name isn't really misleading at all. It's called Lenders Mortgage Insurance. It's mortgage insurance for ... <drum roll> ... the lender. There's nothing in the name that suggests it's for the borrower.

The cost of LMI gets added to the loan, so, from an invetsment property viewpoint, it will probabaly never be repaid. Even it it does, at some stage, it will be a triffling amount compared to the value of the property.

LMI is a cost of doing business and can be a useful tool in getting into a PPOR or IP with minimal financial input from the borrower.

It's all about how you look at things. Sometimes a change of perspective can be very healthy and rewarding.  

评论
My income is $100,000, my wife is on maternity leave and unlikely to start bringing in an income for another 12-18 months.

Downsizing our rental (to save money) is not an option right now as we really need the 3 bedrooms as a minimum.

With no property /equity / security I wonder if I'm just setting myself up for frustration.

Options mentioned above such as saving for a deposit will be pretty hard in the short term, but may be the only way. I think my main concern was that while I'm saving property prices are skyrocketing even further out of my grasp.


:mad:  

评论
Gillchase .. your income alone is more than double the median income.
Where is it all going?
For me, the real question I would be asking, before worrying about skyrocketing property prices is "why can't I save a deposit over the next year or so".
There will always be deals on offer somewhere. There's a reason banks aren't lending 105% willy nilly anymore and that's a good thing.
If you're not able to put together some sort of deposit, over time, then how are you going to manage repayments on a 105% lend, if you could get one.
I think you're approaching this from the wrong angle.  

评论
Rob, I didnt think that was much of an income; especially considering Im the only one contributing to the household debt ;-)

After outgoings like Rent ($1630 pcm), food, daycare fees , insurance and running a car theres not much left at the end of the day.  

评论
$100K income is great! Have you done a weekly/monthly budget? Not sure what your outgoings are other than rent, food, bills, but I reckon you can save for a deposit in no time at all! Do you have much 'bad' debt, like credit cards etc? Do you lead a quite extravagant lifestyle in terms of going out, entertainment, sport etc

I don't believe you're setting yourself up for frustration, I believe if you really want something you'll find a way.

Even something like throwing all your small change into a box & counting it up at the end of the week can help. You could find $100 there that you've been frittering away on coffees or magazines & can now be put towards a deposit. Another good way of saving is to 'pay yourself first' ie 10% of your income goes straight into savings a/c before you do anything including paying bills.

Not sure if you're a reader or not, but a great book on multiplying, saving, investing your money & about your general mindset to money is 'The Richest Man in Babylon'.

Is it an option for you to get a 2nd job just a few hrs on the weekend or Fri nights to give you some extra $$$?  

评论
Thanks Mary&Mat - some good ideas in there.
I recently trimmed budget about as lean as I could since we recently added a new baby. Short of a new job not sure I can do much saving I can do.

I think I might have been living in a fantasy world whereby I thought......
a) My income might allow a bank to loan me close to 105% (ie no savings required)
b) Buy a 2 bedroom unit somewhere like Clarinda (close to my current location)
c) Rent from that unit makes up the bulk of the loan repayment
d) I make up the shortfall (which I hoped would be in the region of $100 per week)

Realistically this is problematic as everything hinges on the deposit, something I just cant seem to find a way around.  

评论
Hi GC
You could think of ways to keep your expenses in controlled, one thing I did was automatically transfer from my paycheck an x amount to a savings a/c which we used to to pay for our PPOR and same method is being used to buy our IP1(still sourcing)..You would not spend the money you dont have easy access to...

Also, revisit all your essential bills ( utility,mobile,insurance etc ) -you could combine your auto,home content to one vendor & save there - check the net.

I agree with Rob on the approach & mindset..I believe its not how much you make but how much you keep...;)

HTH & good luck
K  

评论
Firstly, congrats on wanting to get into the market and provide a future for your family. best of luck with it and hope this site gives you some answers :)

Gillchase said: ↑
Our current situation is as follows, we were saving for a reasonable deposit on a home when the GFC struck and we lost our savings…and the chance to get into the property market.Click to expand...
Did you lose ALL your savings? Do you still have any savings? (trying to work out what is your starting point)

Do you have a budget? It might be instructive to track where every dollar is going. Eg. do you buy lunch or bring packed lunches? Get a coffee every day? etc?

You have a very healthy foundation (ie. income of $100k) and it should be eminently doable. best of luck to you!  

评论
regional areas do offer capital growth, though on average their capital growth is usually discounted by the higher rental yeild.
a regional property might be a good start, as it means less money down, less negative cashflow, and a start in the market.
I'm not saying dont save for a deposit, just save it in equity in an investment property over a bank account.
Saving 10% of a purchase price of say $500k for a melb purchase, $50k, or half the family gross income, not likely to happen for at least 2-3 years. Whats the chances of having a $100k regional property increase to $120k in 2 years? Fairly good, combined with further savings in offset, tax benifits from a slightly negatively geared property, and the awesome effects of being in the market and having a change of mindset, priceless.....  

评论
rob is making some great points on this thread!

Basically Gill you don't want to put in any deposit and don't want to make hardly any repayments, so the bank funds the whole purchase and you get all the growth, the bank might as well buy it themselves.

You need a reality check, you are living in a good suburb and can't save anything on $100k a year so that suggests you are trying to keep up with the Jones's which is fine if that's what you want but long term you are headed for the poorhouse and a miserable pension.

How do couples with 3 kids a mortgage and an income of $50k survive? Not sure but many do it.

Your retirement (at about probably 75yo) is going to be very ugly if you don't make some sacrifices now and build something for the future, go and see a budgeting expert and sort that out and realistically you should be able to save $1500-2000pm easy and have the deposit to buy an IP somewhere next year.

The choice is yours, the high life now and the poor house later or a reasonable life now and some prospects for the future.

Good luck  

评论
It matters little you are the only breadwinner at the moment because some couples don’t earn that much combined and still manage to save up for a deposit! My first job out of uni I was taken along to a meeting with couple by a highly respected tax advisor/lawyer/financial planner (still the smartest person I have met in my life). The couple like you earned high income but owned no assets and had no savings. They were in their late 30s and were optimistic about the good life ahead. My senior pointed out to them that even on their income, by the time they retire, their super is only enough to sustain their lifestyle at the time for 8 years MAX (taking into account inflation). Lots of advice was given to them about how they can manage their money and why good investment will make the difference. As an example, my senior told them his nephew 8 years before lived frugally and saved up a deposit to buy a place within 5km to Sydney CBD. He would have been on less than half your income in today's terms. He never went shopping for clothes just wore what he had and made lunches everyday. He is now a millionaire and travels all over the world. It was a reality shock to them but they realized that even they needed to make sacrifices. I'm not saying you need to starve and obviously the real estate climate has changed but the idea is the same. There are no shortcuts in life. You have to put in to reap the rewards. You need to change your attitude and know there are definitely ways you can save up a deposit within the next 12 months on your income (especially if your wife returns to work soon). Anything is possible.

My friend who works in tax constantly reminds me why it is important to understand how to manage your money. She has a client who earns $150k a year who has no assets and another client who earns $70k a year who has 3 properties 2 of which have become positively geared. After tax, their net positions are only $13k apart. It doesn't take a scientist to work out who will have a more secure future.

It is a big shame that you are not already in the property market. Think about the taxes you are paying to the government every year on that income. You are on a very high bracket. If your feet are in the door, you would have been able to negative gear and have the benefit of increasing property prices.

The good thing is it is never too late and you are not in a bad position financially on that sort of income. So start setting some goals. It might take you a little while to get used to the lifestyle, but once you get there, you'll look back and realize how worthwhile it all was.

I hope my tone hasn't come across as being too harsh. Not intended at all and obviously at the end of the day it is your life. I just think you have a lot of potential and it is a shame not to realise it.

Best of luck to you!  

评论
Where there is a will there is a way :D

We are single income one kid.

Im making $40,000 PA Before Tax :eek:

We have owned our 3 bedroom brick home for 1 year now and have money to spare each week.

Id suggest a strict budget and some compromises are coming your way.

Good luck :D

Cheers

Mick  

评论
What if the answer is NO!

HELP! Can we be homeowners? ​

Hi there Gillchase,

No one here can answer this question except yourselves.

Do not ask other people whether YOU can do something or not. On that basis you have given away all your responsibility and power of choice to other people. Guess what, other people might create your world too small. :(

Perhaps the question should revolve around, what strategies could we undertake to become home owners......and I guess this is where the opinion on the replies is heading.

You've had some outstanding responses here. Rob is right on the money. Cannot give you any further credits mate, so acknowledging publically.

1. Spend less than you earn
2. Invest the difference in term deposits.
3. Roll over all interest and capital and compound. Never touch this money for any other purpose as to seed a home loan.
4. Get a deposit happening and perhaps re-evaluate your aspirations as to choice of suburb and type of dwelling.

5. But, most importantly just start. Begin. Now. :cool:

There are people on this very forum who probably don't earn half of that and have managed to amass quite sizeable portfolios. Precedent is everywhere and if you've come for information and inspiration you're in the right place.

A hundred thousand a year gross is ample to live and save a significant portion of what you earn.Unless there are other unforseen huge expenses that you are not disclosing (and BTW you are not complled to) such as major consumer debt or large medical bills, etc, you are earning far more than average Australians who have larger family and still manage to pay mortgage interest.

We are all unfamiliar with what your lifestyle choices are and hence cannot judge on that score, however realise that you may have to scarifice some luxuries or tokens of instant gratification now rather than sip from the cup of regret later. :eek:

Sacrifice is merely releasing things of a lower frequency/nature for things of a higher nature. It requires discipline.

Get onto a budget and hedge yourself with adequate insurances. As Tony mentions the choice is yours.

Good luck. :)  

评论
Gillchase said: ↑
Here’s my situation - do we have any options to own a home?

Yes

I’m now at a point where I realise that by not owning a home or at least an investment property we are leaving ourselves exposed in later years such as retirement when we will then have no choice but to continue renting.

Agree

So we find ourselves in our mid 30’s with one good income (the other on maternity leave) and no savings. I realise a family home is out of the question – mainly because we need to remain in or around the area we are currently renting in. That got me thinking, what about an investment property further out that we could one day move into in retirement when all we would need is a 2 bedroom and being in a particular area is not as critical.

Why - what are the reasons you need to remain in this area?

My main thoughts/concerns:

No deposit, but reasonably good income Well about average income & I guess you are paying plenty of tax !

Not a lot of spare $$ each month to spend each month
Do 105% loans still exist for people with no equity in an existing property?
Are there any strategies I haven’t thought of that could be explored?
Would an investment apartment for eg taken on an interest only loan ever serve the purpose Im trying to achieve (ie. A paid of home in 30 years when we retire)Click to expand...
Gill
Get cracking, if you can't save any money from 100K income - you need to examine closely what you are doing with your pay.

The power is within yourself - You are in the driver's seat idling the vehicle about to start on your journey.

Examples of how to start...

Sit down with the wife and say I need to save $200 per week - so I will direct debit that from my pay & bank in a separate account.

Any money we get eg. cheque, tax refund is banked in this account and not touched.

Think twice before making or accepting invitations out to restaurants, hotels as a way of saving money.

Borrow some books on budgeting & saving from the library to get some ideas. Making money made simple by Noel Whittaker and Anita Bell (hope that is her name as a long time since I read her books).

Also read Jan Somers books on property investing.

When wife goes back to work - save her wage (yeah I know child care is expensive).

Get cracking....funny thing is when you start the ball rolling - you achieve things.


Good Luck
Sheryn  

评论
Gillchase said: ↑
my wife is on maternity leave and unlikely to start bringing in an income for another 12-18 months.Click to expand...
Gillchase said: ↑
After outgoings like Rent ($1630 pcm), food, daycare fees , insurance and running a car theres not much left at the end of the day.Click to expand...
I'm all for maternity leave as it is an important time for parents and baby. But...if she is on maternity leave and not earning an income...why are you paying daycare fees???  

评论
Ski-bum said: ↑
I'm all for maternity leave as it is an important time for parents and baby. But...if she is on maternity leave and not earning an income...why are you paying daycare fees???Click to expand...
You beat me to it. Not that I'm trying to pick at Gillchase, but I suspect there are areas in the budget that could be looked at, as has been mentioned repeatedly...  

Property Investment

Australia property Selling Hints | Sydney

澳大利亚Hi folks I recall ready somewhere about what are some simple tricks for making your place more attractive during a home open. Im seriously thinking of selling my little pad and want to maximise my efforts. Any hints greatly appreciated. 评论 ...

Property Investment

Australia property Re-zoning | Sydney

澳大利亚What would the chances of a NSW Local Council allowing a community titled development (homes, community buildings, etc) on an area zoned Protected Agricultural land? Does anyone have experience in this area? Looking at the local council LEP, ...