Buy PPOR now or later? [Melbourne]

Discussion in 'The Buying & Selling Process' started by muhammadzubair, 9th May, 2020.

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  1. muhammadzubair

    muhammadzubair Member

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    Hi all,

    I was very keen on buying our first home earlier this week and had secured a pre-approval just before the COVID-19 crisis started to take shape. I did not have any experience of buying property to begin with and then all these changes to the methods of inspecting a property became enforceable. We have looked at few properties in person but did not quite like one yet. The uncertainty and sentiment in the air these days is further dampening my keenness to proceed with the most expensive purchase of my life. If I buy, it will be our PPOR and we will not have to rent anymore.

    I am lucky enough to still have a job and there is no indication from my employer that my employment may be terminated in foreseeable future.

    There are about 5 weeks left in the validity of the pre-approval I have. Should I:

    1. Buy now
    2. Get my pre-approval extended and buy by Sep
    3. Forget about buying a house for now

    I would like to ask what would be a reasonable option for me in this COVID-19 era.

    Please pardon me for knowing very little or not enough. I appreciate your advice.

    P. S. I will buy in Melbourne if I proceed and will keep it as our PPOR for at least 3 – 4 years. My budget is slightly less than $500,000.
     
  2. Trainee

    Trainee Well-Known Member

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    None of the above.

    personally, have never relied on a preapproval by a particular lender. Instead have relied on a good mortgage broker telling me they can get me a loan up to $x.

    dont limit yourself to a deadline, but do have a plan. You want to bargain hard on a not so perfect property? Or you want to find the perfect one and bid strongly for it?

    an uncertain market is the best one for buyers coming out of renting. Youd prefer getting outbid in a booming market?
     
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  3. muhammadzubair

    muhammadzubair Member

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    Thanks @Trainee for the reply.

    A mortgage broker got me this pre-approval through a lender of my preference (they proposed three). I don't know if that helps my situation better. They also indicated a possibility of getting it extended if I could not buy in the first three months.

    I prefer bargaining hard on a not-so-perfect property for now. After all, it may very well not be the house I retire in.

    I agree that the pandemic made it a buyer's market but I don't know whether prices will drop further. I definitely do not want to get lazy now and then end up in a highly competitive market later on.
     
  4. Archaon

    Archaon Well-Known Member

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    what will be the difference between rent and home-loan repayments monthly?
     
  5. muhammadzubair

    muhammadzubair Member

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    Mortgage will be couple of hundred dollars per month more than the rent.
     
  6. Tony3008

    Tony3008 Well-Known Member

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    Then add rates, water rates, insurance and maintenance.
     
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  7. muhammadzubair

    muhammadzubair Member

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    Absolutely. Those expenses should never be overlooked as they are incurred consistently.
     
  8. Ian87

    Ian87 Well-Known Member

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    If you have secure jobs and are confident that will last for the forseeable future I don't think there is any harm in waiting a few more months to see how things shake out. If you keep your pre approval active then you could be in a good position to offer a nervous seller a short settlement. Likewise if you buy now and intend to hold a while you should be fine as well. But I personally would not be rushing in right now.
     
  9. muhammadzubair

    muhammadzubair Member

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    Thanks @Ian87. What you advised makes sense. I have discussed it with my partner too. Although my partner is not working presently, thankfully I have a secure job for the foreseeable future.

    As I do not want to rush in right now, I might speak with my mortgage broker to see if I can get my pre-approval extended (that will also validate whether I still have one although my circumstances have not changed). Having a pre-approval will definitely help reaching a good deal with a vendor wanting to settle quickly.
     
  10. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    Pre-approval is always subject to a valuation of the property. It’s not a blank cheque. Never make an unconditional offer for a property, or only bid at auction if you are 100% sure (having being advised by your broker) you’ll receive unconditional finance approval.
     
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  11. Spiralkut

    Spiralkut Well-Known Member

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    If you can afford to then I'd buy now especially if you find a house you like. There's no point trying to wait for a potential bottom of the market in whatever area of Melbourne you're looking at because having a 500k budget there probably won't be a bottom for example if you're looking at Werribee/Wyndham Vale/ Manor Lakes they probably won't even fall. You have to remember the outer skirts / lower ends of the market are less volatile to a downturn if 1 happens.