Hi friends, I am in a position to buy a first family home (in my forties) in cash due to an inheritance that I then invested in TDs a decade or so ago and just saved and saved. Current employment during covid amounts to about 2000-3000k or so per month. My savings is about 410k and the house we are looking to buy is about 320-360k. I don't want to go over this too much as I want to live modestly, still have savings for a rainy day and I know there are costs associated after you pay the purchase price, like the conveyancing fees and rates. Is there anything I am missing or need to consider when paying cash for a house? Also, how much should I expect to spend above the purchase price of the house? ie fees etc. Thanks for your time! Hoping to cover any blind spots!
In Vic - stamp duty (never bought anywhere else). We allow about 10% of the purchase price for stamp, legals, insurance etc. Usually more than enough. The Y-man
Incidentally, you might want to get a loan in any case and whack the money in an offset account to get the same effect. The Y-man
thanks for the advice. From my understanding you still have to pay interest on a loan even with an offset account. Is that right or is there something I am missing?
I hope I can explain this right: Let's say the loan is at 4%. The offset account (as long as it is a 100% offset - talk to your broker!!) effectively earns 4%pa too. So if the loan is for $300k and there is $300k in your offset, not interest is payable, because the 300k in your offset earns the same amount of interest as the interest charged on the loan. You may be thinking of Principal payments - different matter - some of your offset is used to pay down the loan (i.e. you owe less every month) - but the money remains yours. The Y-man
Will this be your 4 ever home ? Any chance it will ever become a rental while you buy another ? ta rolf
Is this the first home you (and partner) have owned in Australia? If so, you may be eligible for FHB government grants.
Hey Kerla, great work & my hat goes off to you being so conservative you have amassed such a sum & not rushing. Firstly anything I say is general & does not account for your situation. I agree with the strategy of an offset generally but your in quite a unique position were even if you bought the place outright you still have 50k Plus cash & by your comments it seems you like a slow and steady approach? maybe a small loan could be ideal? like 100k-300k & park almost the full amount of the loan in the offset that way you essentially pay almost no mortgage & can access a large sum when you need. what is the cash you have saved doing? is it earning you anything or assisting to reach your long term financial goals? Wish you all the best!!!
