Advice on buying

Discussion in 'The Buying & Selling Process' started by Ben20, 23rd May, 2020.

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  1. Ben20

    Ben20 Well-Known Member

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    Hi guys,

    I am first time home buyer looking to buy a house in Melbourne’s western suburbs. I was looking for properties online when Covid-19 induced restrictions started. Now that restrictions have eased off a bit, I am starting to see open house inspections. My partner thinks that we should wait for sometime to see how all things pan out before committing to buying a house which is going to be the biggest financial decision in our life. What do you suggest? Is it right time to buy or, would it be better to wait for a while?

    Cheers

    Ben
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    No one can actually answer that question with any certainty, just have to search to see how many FHB's have asked the same thing before you.
    There is never a perfect time to buy so don't let it hold you back.
     
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  3. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    What's the worst case scenario if you buy now?

    What's the worst case scenario if you buy later?
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member

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    Welcome to the forum.

    Big decision yes.

    Hard to gauge where the market is headed, certainly Sydney and Brisbane quality Market havent slowed, in fact Id hazard a guess there is some pent up demand there from what we are seeing with clients on the ground regurarly being WELL outbid.

    What is your budget and how deposit do you have ?

    This wont be your biggest purchase, the mortgage will be that :)

    Not your biggest asset either :) Your incomes are that.

    ta
    rolf
     
  5. Ben20

    Ben20 Well-Known Member

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    The worst case scenario if I buy now is that the price of the property substantially drops, and bank may not issue me loan at the settlement leaving me in default.

    The worst case scenario if I buy later, say after September, would be that the property prices may go up slightly higher than now.

    This is what I could come up with.
     
  6. Ben20

    Ben20 Well-Known Member

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    Thanks Rolf.

    I am looking for a house in western suburbs of Melbourne with 100K deposit. I would like to keep my LVR around 80% so that I don’t have to pay LMI.
     
  7. Lindsay_W

    Lindsay_W Well-Known Member

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    If the property value drops between finance approval and settlement it's highly unlikely that the bank would conduct a new valuation before settlement, (I've never seen it happen personally) Valuations are completed before Formal approval of any finance.
    Even if the bank did that then you could potentially negotiate with the seller to buy it at a cheaper price = win for you.
    I think the second scenario would pose more risk as you could be priced out of that particular property/suburb.
    Just my 2 cents.
     
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  8. JTN

    JTN Member

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    I am not an expert, but I bought an apartment at the peak of of covid-19, and it was probably one of the most stressful things I've done! Thank goodness, I have a partner doing this with me.

    I know a lot of people advised to wait it out, and to be honest, I can see the value in that.

    I also had the same concerns with you when I made the offer to the vendors, in particular about the bank's approval and if the property's valuation dropped, I would be left making up the difference. Even though the apartment was listed for auction, and the auction process applied i.e no cooling off etc, to protect myself, I included a subject of finance condition. So once I got the bank's unconditional approval, the contract became unconditional. If the bank did not give me unconditional approval, I was able to walk away without losing the 5%. In terms of the property price dropping, this is my first home and will be my PPOR, and initially I was anxious about that, however, since I will be living in it, at least 2-3 years before considering moving, I don't think it would affect me a lot. I am able to service the mortgage on my own, and I think that's the most important thing.

    The whole process is very stressful, and I completely understand your concerns. PM me if you want to have a chat or a vent :)

    PS: I bought in Edgecliff NSW.
     
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  9. Ben20

    Ben20 Well-Known Member

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    Thanks @JTN for sharing your personal experience.

    I am torn between buying and not buying at the moment. At one hand I think as I’m going to buy a place to live in, even if price drops that shouldn’t affect me that much. On the other hand, I think if I wait for few months, there will be more clarity, and more listings too. I read somewhere in the forum, if you are in doubt don’t do it. May be I will adhere to that this point in time.
     
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  10. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    All depends on your appetite for risk, and your individual financial circumstances.
     
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  11. Ben20

    Ben20 Well-Known Member

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    I am pretty risk averse at the moment.
     
  12. Trainee

    Trainee Well-Known Member

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    have you ever embraced risk with investing?

    the thinking is, now its covid. In a year, will it be something else?
     
  13. Ben20

    Ben20 Well-Known Member

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    I was putting all my fear aside, and getting ready to invest in property and the Covid-19 struck. But, I am optimistic.