NSW 29m2 unit in Newcastle

Discussion in 'Property Analysis' started by FHB, 19th Oct, 2017.

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  1. FHB

    FHB Member

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    Location:
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    first home buyer looking at buying a small unit 29 m2, 77m2 overall including balcony and courtyard for owner occupy, only myself living there, great views, kids have grown up
    My LVR is 19%
    Last sold 2 years ago for 130k less or 1/3 less of the value it is now

    It’s on a great rd in Newcastle city, close to the beach and not far from Darby St etc.


    Good idea or not?
     
  2. Foxdan

    Foxdan Well-Known Member

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    PPOR - do whatever makes u happy
    Investment - no. Very limited number of people that will ever want to rent it or live in it. Don't think banks will even fund a u it so small.
     
  3. jaybean

    jaybean Well-Known Member

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    Thre's a reason it sold for 1/3 the value...

    But on the other hand if you're a retiree and looking at this as more of a place to live rather than an IP then maybe it's worth a look.
     
  4. Propertunity

    Propertunity Well-Known Member

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    Great place to live as a PPOR for yourself as it seems to fit your lifestyle. Generally would not recommend as an IP due to small size and difficult for a future purchaser to obtain finance for at <50m2.
     
  5. FHB

    FHB Member

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    I’m 40, so not ready to retire just yet unfortunately. I have 81% deposit so I know I can get a loan but as propertunity has stated that is what I was worried about, cutting out a whole demographic due to being under 50m2 for resale in the future.
    I also assume if I decide to buy it and decide on getting a ip in the future it would be hard using my ppor as security for getting a loan
     
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Is the lender you're assuming you can get a loan through aware that it has 29sqm of living space? A large deposit is not an assurance that a lender will approve a loan. There are ways to finance this, but most lenders will reject it immediately due to the size.
     
  7. FHB

    FHB Member

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    Yes Peter, Commonwealth bank said yes, ANZ maybe, U Bank said yes but I’m borrowing too little <100k

    Ones who said no:
    Unity bank
    Loans.com.au
    HBSC
    CSU

    I’ve been advised by a broker it’s certainly doeable

    But you’re def right, most have said no

    U bank said yes only because overall including balcony and courtyard 77m2

    These are the only banks I’ve called so far
     
  8. FHB

    FHB Member

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    Unity bank > 40m2
    Loans.com.au > 50m2
    HBSC > 45m2
    CSU > 50m2


    HSBC not HBSC
     
  9. jaybean

    jaybean Well-Known Member

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    What's the industry "standard" minimum these days? Still 50?
     
  10. FHB

    FHB Member

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    Yeah pretty much, some banks will lend on 40 or 45
     
  11. jaybean

    jaybean Well-Known Member

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    Are you sure you can't get something that size for a little more?

    Remember even 50k more is only really 10k out of your pocket.
     
  12. FHB

    FHB Member

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    Ok, I’ve never heard that jay bean. That might be something worth looking into? So 50k more is like paying 10k in interest?

    Forgive me, this is my first home purchase and I’m learning so much.

    Let’s say for example I had 315k, I work in Newcastle casually and I’m looking into getting into the property market. I’ve seen cheaper 2 bedroom units on the central coast over 50m2, am I better off buying there, travelling to work is fine with me
     
  13. jaybean

    jaybean Well-Known Member

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    No what I mean is if you're paying 20% deposit then to borrow another 50k you only need an extra 10k in cash.

    EDIT: think about it like this. Say the purchase is 130k, and because of the size the bank asks for 70% LVR. That's 39k (calc: 30% of 130k). Or maybe you've had to go to a crappy bank like Liberty because no one will finance it, which will lead you to other problems such as higher interest rates.

    Now imagine if you buy a different place that's 180k, but because it's 50sqm, you are allowed 80% LVR, which is 36k!!! (calc: 20% of 180k)

    So for less cash up front, you've actually purchased a better house. Sometimes it's actually "cheaper" to buy a more expensive house.

    Less cash up front. Better LVR. Potentially better interest rates. Better house.
     
    Last edited: 19th Oct, 2017
  14. Gockie

    Gockie Life is good ☺️ Premium Member

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    I'd go for the 2br unit in the Central Coast over the 29sqm Newcastle Property just because of the bigger space and lending practices. 29sqm is really too small for the banks, and basically you'll find it hard to sell because lenders currently don't want to lend for such a small unit. Catch 22.
     
  15. Trainee

    Trainee Well-Known Member

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    Why would you even think about a 29sqm unit? What appeals?