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Advice pls first home buyer.....

Discussion in 'General Property Chat' started by Kim, 15th Aug, 2016.

  1. Kim

    Kim Member

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    Hi Everyone,

    I'm a single working female in my mid 30's and really want to get into the property market. I need some advice though. I just phoned a Mortgage Broker to have a quick chat about the amount I could potentially borrow.

    I have a 45k deposit and taking into account my income he said that could probably loan me 260k. As I don't have a 20% deposit I was told I'd have to pay approx $3500 for the LMI. He told me that I should look for a property around the 280-290k mark. This will be first purchase and I thought about living in it for 1 year and either renting it out or staying put (providing I can comfortably afford repayments). At the moment my weekly rent is $180 so if I did live in it the max I could really afford would be $260 week.

    I have really worked hard to save the deposit and it's taken many years :) I'm proud of it because I don't really earn a large income from my job. My hourly rate has just gone up to $23 per hour. I have never ever liked to be in debt and I'm one of those people who is not materialistic. I'm happy with the basics in life.

    I had a look at properties online in the North Brisbane (Qld) area as that's where I work and there really is nothing much for that price range (2 bedroom no body Corp fees).

    I wanted to buy a 2 bedroom incase if I'm living in the place and need help to pay the mortgage I could rent the room to someone else. Also as an investment down the track I'm thinking 2 bedrooms are much more desirable than a 1 bedroom.

    So my only real option now due to the amount I can borrow is to look at buying a 1 bedroom. Do you think to get my foot in the door I should buy a one bedroom and pay it off as soon as possible or save more for a larger deposit and maybe get a second job?

    Thank you everyone :)

    Kim
     
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  2. Brady

    Brady Well-Known Member

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    Great work on saving the deposit - biggest hurdle for FHB's

    Have you thought about continuing to rent wand buy the property you think will be a better investment (2bedroom) - going forward if your income increase, you havea someone live with you or you believe you're comfortable in making the repayments you could move into this property.
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Congrats on saving the deposit Kim.

    If that's what you can afford, do it. Better to be in the game with a 1brm than watching from the sidelines making no money.

    What you want to do that for? Pay IO on your loan and turn it into an IP down the track and the debt will become tax deductible.

    The problem with that strategy is that the market can go up faster than you can save.

    You're young. Sure, work hard and save some more deposits.
     
  4. KoopaTroopa

    KoopaTroopa Active Member

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    Congrats on the deposit Kim, it's not easy saving any amount let alone $45,000!

    Here's a quick pic used by ING calculator
    [​IMG]

    That's conservative at a higher interest rate than any current lender, but one piece of advice is to use an online calculator and play with higher interest rates to see if you are comfortable with the amounts should the rates go higher in the future.

    Lowering the rate to 5% gets a lot closer to your $260/wk figure, so you should be able to get into the market.

    I agree that you should get in with a 1bed if that's what you can afford.
     
  5. Brady

    Brady Well-Known Member

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    I don't mind the idea of the second job - if you're fit and able why not try get ahead.
     
  6. Tonibell

    Tonibell Well-Known Member

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    You have done the hard part - saving a deposit and feeling ready to buy.

    You should try to get a house with some land - that is where the gains are to be made.

    Keep going to the next suburb out until something comes near your budget. Don't worry too much about the condition of the house - most things can be fixed over times - just try for the best location you can get.

    First few years will be tough but the returns will make it all worthwhile.
     
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  7. Angel

    Angel Well-Known Member

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    Where do you work Kim?

    I have no idea what 1 and 2 bedroom units and townhouses cost in Brisbane these days. But I would prefer to see Kim get a 1 bedroom TH in a mid ring suburb than a tiny house out at Woodford or Kilcoy unless she works locally. Imagine the outrageous travelling costs to get to work and home again if you work at say Chermside or the airport, and the risk of falling asleep while driving. It would make life unaffordable. It is often cheaper to live closer in once commuting is accounted for.

    My RE agent at Redcliffe was saying on the weekend that he knows of a unit for $270K. If you work at Caboolture, then you can buy whatever works for you in that area and within your budget.
     
  8. Angel

    Angel Well-Known Member

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    There is nothing negative buying a 1 bedroom unit. In the future there will be more and more single person households so I believe that demand for them will increase.
     
  9. joel

    joel Well-Known Member

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    Northern Brisbane.. buy a house for 250k in deception bay area. Units/apartments are a dime a dozen
     
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  10. NewGuyACT

    NewGuyACT Member

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    Plenty of reasonable advice here but I'll just play devils advocate. You have about 30 years left to work (we are the same age, scary isn't it!), so I would seriously consider investing in my career / education. Doubling (or tripling) your income would be a better investment than you'll probably get out of property. Getting a second job is not the same as investing in a career....
     
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  11. hammer

    hammer Well-Known Member

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    This for sure! Don't buy an apartment in Brissie. Too risky. A house on the other hand, even a crappy one will be a much safer play due to the land.

    And this too. You should be able to do better than 23 per hour. Not knocking you in any way, just trying to help. Aim high! Even if you only get 60 percent of the way there, you'll still be miles ahead.

    Do both.
     
  12. Angel

    Angel Well-Known Member

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    Hi Kim
    The readers from outside Brisbane might not understand the difference between a crappy fibro house at D Bay riddled with termites that has already increased $50k in the past two years, and a decent $300K medium density low-rise or single story unit at Chermside or Mitchelton or Sandgate or wherever is close to where you currently work.
     
  13. albanga

    albanga Well-Known Member

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    Great job on the deposit! $45,000 is a lot of money!

    Firstly I'm sure your broker touched on this but do you have any debt? If so the first thing you should do is attack that. Any personal loans, credit cards.etc pay them off with your 45k. They will be costing you unnecessary interest and crippling your borrowing capacity. Get rid of them immeditely.

    Once that is done (if you have) you will find a significant boost in what you can borrow. Yes you will have less deposit but I would personally prefer potentially more deductible LMI (if turned into an IP within a certain period) than bad debt.

    Then as suggested by yourself aim for a 2 bedder, they will always outperform 1 bedders and then rent out a room. You will find this will greatly assist with covering your monthly mortgage payments.
     
  14. Kim

    Kim Member

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    Thank you so much everyone for all of your replies & advice, it's much appreciated :)

    Angel - I work around Chermside & Stafford.
     
  15. PorkBellyLover

    PorkBellyLover Active Member

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    I bought my PPOR by paying LMI.

    LMI is not always a bad thing. Yes it will cost you more, but in return, it will get you into the market faster.

    Just as Propertunity mentioned, well, depending on where you are, the market may go up way faster than we can save. Not sure about the area you after, but if you consider Melb and Syd, depending the purchase price and the CG, the LMI will pay itself in short term (less than a year in some cases).

    All the best!
     
  16. Angel

    Angel Well-Known Member

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    Hi Kim. As long as you avoid the horrid ugly towers around Westfield (highrise oversupply), a unit or townhouse in that area would always be popular. There may be 1 bedroom units and low-density apartments near the hospital. The complexes around there are quite attractive.

    You can also ask another broker for a second opinion on serviceability. Good luck