Buying a 2 bed house in Melbourne inner West at the moment FHOG, 800k - 840k

Discussion in 'Where to Buy' started by 3380734, 11th May, 2020.

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  1. 3380734

    3380734 New Member

    Joined:
    11th May, 2020
    Posts:
    3
    Location:
    Melbourne, AUS
    Hi all,

    I've recently started looking into buying my first home and found some great properties which have fallen slightly in price due to COVID, around the 800k - 840k mark.

    I currently earn 75k per year and aim aiming to progress this up to 100k in the next few years.

    I've never bought a property before, so I'd qualify for the First Home Owners Grant.

    I have 130k capital and an additional 70k in shares.

    I was looking at a 2 bedroom house because I really like the idea of owning my own land and having a backyard. I've been told by quite a few people to hold off because:

    A) the market prices will likely drop
    B) to get a big enough mortgage, I'd be maxing out my borrowing power and hence going into a lot of debt.

    Many people have recommended that I save more money, dont touch my shares (invested in all ordinaries) and look at getting a 2 bed apartment instead of a home and then buying a home later down the track when I really need it.

    I'm single, so dont necessarily need it for a family. My intention was to rent out the 2nd bedroom and get a house early so that I am focused on this rather than getting distracted and spending my money on other things. Also, starting with a house rather than an apartment first so that I go straight towards what I want, rather than living in an apartment for 5 years or so first.

    Thanks in advance for any tips or advice, this process has been quite confusing. I've seen a lender and got approval for a mortgage already and done about 10 inspections over the past 6 months.

    Cheers
     
  2. whiteknight

    whiteknight Well-Known Member

    Joined:
    6th Feb, 2017
    Posts:
    46
    Location:
    NSW
    Please correct me if I'm wrong, but doesn't the FHOG only apply for property purchases < $750k in purchase price?
     
  3. SydneytoMelbourne

    SydneytoMelbourne Active Member

    Joined:
    10th Jan, 2020
    Posts:
    39
    Location:
    Sydney
    You've got a great deposit, but curious as to why you've settled on $800-$840k.

    Looking at a $600k+ mortgage on a $70k salary. I just did a super simple borrowing capacity calculator (BankWest was the first one that came up on google) - even if your expenses were $1k a month, the max loan was $476k.

    I'm more risk adverse than some, but this COVID situation has shown me that you shouldn't bank too much before you've got it (e.g. your payrise, the likelihood of renting out a 2nd room). The bank probably won't either!.

    I'm a novice compared to most on this forum, but think you'd be better off at a lower price point.
     
  4. 3380734

    3380734 New Member

    Joined:
    11th May, 2020
    Posts:
    3
    Location:
    Melbourne, AUS
    I've just checked the Victoria State Revenue Office's website and you are correct. I guess I'll have to rethink going above 750K.

    First Home Owner | State Revenue Office

    I went to see a mortgage broker and I was initially prioritising what was best for me financially, which would have been a 2 bedroom apartment in the 500 - 600k range.

    The broker recommended that if possible I get the property that is my preference firstly due to what I actually want, which for me would be a home rather than an apartment.

    The broker's logic behind this was that if I get something that isn't what I ultimately want, then I'd be going into debt for something that I'm planning to resell at some point and then would need to pay stamp duty/other fees again.

    Although, now that I am aware the FHOG would only be an option if the property was below 750K, a home may not be an option.

    Cheers