Guidance on how to purchase for the long term.

Hi all,

First off, moderators, please let me know if this post is in the incorrect area - will gladly re-post elsewhere. Secondly, I'm here to seek guidance from the community of PropertyChat.com.au. I've been a lurker for some time now, and too shy to post, but here goes .

Here's the back story, my partner and I are having our first child in August, and looking to purchase and occupy a 3 BDR property in Brisbane within a 5 -> 10KM ring from the city. I've owned property previously in VIC, so we won't be eligible for the first home owners grant, though we aren't married. Also, we are also looking at purchasing an existing dwelling, so I think this rules us out completely for the first home owners grant. I believe having a child will affect us with going for a bank loan, as my partner will be taking a years leave off of work.

We currently have savings to accommodate a 20% deposit for a property of $600,000. It would be a dream to buy an old school QLD'er to work on and build a family home, though I don't know if this achievable. Would a better approach be to purchase a 3 BDR town house to live in for a few years, say 5? Then look at burrowing against the town house to look at purchasing a house?

Sorry for using simple terms with describing the approach to purchasing property, finance isn't a strong back ground of mine.

Cheers,

Salty Clam

 

Based on the fact you're looking at this from a personal and not investment perspective, I think you and your partner should be looking ahead at how many children you're planning to have and what your plans will be with respect to work and cash flow.

I can tell you from experience that the transition from DINKs to a family of 3/4/5/whatever on reduced income happens very quickly and the size of the property you'll want will need to be accessed before you know it...basically, don't waste money transacting property if you're planning to shift again in 5 years. Buy the family home now if you can afford it and be done with it.

- Andrew

 

I agree with Andrew's feedback above.

I'd just go for something with the land rather than the townhouse.

Better use of cash deposit you have right now, rather than converting a townhouse to an investment property down the track, drawing down equity to fund a home (it may mean higher non deductible debt).

On the loan front - do you have savings and buffers to show for while your wife is on mat leave and can she get a letter from her employer saying she will be returning to work on a particular date, full time / part time and income ? Need to show this to lenders for any shortfall in borrowing capacity for the period she is away from work.

 

I wouldn't rush to buy before having a baby. You might be tempted to keep renting, with a big pile of cash in the bank, until mum and baby are both home safely.

 

Thanks for taking the time to respond. We're looking at having 2 children in the long term. Work for both of us is stable, I work in the IT industry, primarily healthcare. My partner works for a federal government department, and has her job secured for when she is ready to return to work. I like you're thinking!

 

Thanks for your insight! My preference is for a house, as opposed to a town house, though thought there may be a better approach to securing a nicer/larger property in the long term.

In terms of savings, we have 100k allocated to the deposit. I have about 12k saved of personal savings, and my partner has 2k. Though, with starting a family we'll combine our personal savings. She works for the federal government and has her job secured for her return after maternity leave. She's looking to take a year off. Our combined income at present is around the 170k mark.

Cheers,

Salty

 

Thanks for responding. We are going to rent for a 6 month period to get a feel for where we would like to live. Only concern I have, is that it may be hard to get a loan/purchase a property once my partner is on maternity leave.

 

You say in the original post that you have enough for a 20% deposit, but above you say you only have $100k plus minimal other savings ($14k total between you).

20% of $600k = $120k.

Then you'll need more money for stamp duty, legals etc etc.. (which you could borrow in addition to the rest of the 80%)

But then, what about money for day to day?

You're not far off, but you're not quite there either. Make sure you have your maths downpat before you do anything.

In your situation, I'd want at least $20k in accessible money, plus your full deposit.
So, $140k (or more of you want to avoid LMI).

 

Yes, that may be true. But there's no rush to buy. Look at the data and you'll see that Brisbane prices aren't about to soar to the moon. It just sounds like you're rushing in a little bit of a panic and whenever I rush to make a decision it tends to be sub-optimal. Nothing wrong with renting until mat leave is finished. If you find somewhere suitable then great. But don't rush brother.

 

Depending on shortfall in borrowing capacity relating to your wife's income you will need money to show for the entire mat leave i.e. 12 months.

Best do the sums on the front end and seek specific advice on what you are wanting to do on the loans front.