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Am I on the right track or can I purchase now?

Discussion in 'Property Finance' started by Cascades, 22nd Jun, 2016.

  1. Cascades

    Cascades Member

    Joined:
    16th Dec, 2015
    Posts:
    12
    Location:
    Sydney
    Hi there, I'd love a bit of advice in regards to purchasing my first investment property and would love to know if I can buy now or I'm on the right track.

    26 years old. $22k in savings. Interested in purchasing south east of Melbourne. Broker told me I could purchase a place up to 370k. Last time I met with my broker in Dec with 16k savings he told me I am just about ready to purchase and gave me the all clear. I'd like to know if I should be saving more at this stage or I am safe enough to purchase and handle my first property. I'd ideally like to spend around 350k.

    I just signed a new contract at work guaranteeing me 36 hours per week so I now have a bit more of a steady income. I now earn average $750. My expenses currently are:

    $150 Rent per week
    $70 in gas and petrol per month (good on gas, only drive to and from work)
    $29.90 phone bill per month
    $50 internet bill per month
    $100 give or take on groceries per week (trying to cut this down)

    I try and put in around $250 per week in savings but will add more if I have left over money at the end of the week.

    Car is paid off.
    No credit card debt.
    Kids are not planned for at least another year or two.

    Thankyou in advance for your advice.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    You would generally need at least 10 to 15% for deposits and costs so you don't seem to have enough.

    Are you intending to get any stamp duty concessions and FHOG?
     
    Bran likes this.
  3. Cascades

    Cascades Member

    Joined:
    16th Dec, 2015
    Posts:
    12
    Location:
    Sydney
    FHOG? I thought you could only get them on a property you were intending on living in? This is purely investment. Also, I always thought it wasn't enough but I want to understand why my broker would tell me I am ready to purchase if I have no where near enough money.

    I have my parents going guarantor.
     
  4. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    897
    Location:
    Melbourne
    If you have a guarantor, you don't need a deposit at all. you are effectively borrowing the deposit from your parent property.
     
    Terry_w likes this.
  5. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    907
    Location:
    Perth, WA
    Ding!
     
    Jess Peletier and tobe like this.
  6. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Adelaide, SA
    A guarantee from your parent provides their equity to cover a portion of the purchase (generally up to 20% of the value of the purchase + any costs - but depends on individual lender policy as to the max) - this means you do not need to put in any cash funds to cover the purchase. We do this quite often for early investors who try to use it to leapfrog into their first investments - particularly if they can use their cash funds to instead renovate the property etc.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
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    Location:
    Gold Coast
    Obviously the 16 k was for stamps then .
    again may be able to add to guarantee loan .......

    Ta
    Rolf
     
  8. Greyghost

    Greyghost Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,262
    Location:
    Melbourne
    But you are going to live in it...........