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Hello everyone, I need your guidance

Discussion in 'Introductions' started by Sunnyb, 22nd Feb, 2016.

  1. Sunnyb

    Sunnyb New Member

    Joined:
    18th Jan, 2016
    Posts:
    2
    Location:
    Sydney
    I joined this forum few days ago to expand my knowledge about property. Please find below details about my financials:

    My income - 120k
    partners income - 75k (started job 6 months ago)
    cash in hand - 50k
    currently paying rent - $575 per week
    dependent - 1 (3 years old)

    I would like to have some guidance from you regarding what options I have. I am planning to buy a PPOR for around 800k in future (not immediate).
     
  2. MsAli

    MsAli Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,147
    Location:
    Sydney, Australia
    @Sunnyb - Welcome

    800k PPOR would require a minimum of 80k deposit at 90% Loan to Value Ration (LVR).

    Have you considered saving up a bit more and investing in a rising market and then moving on to your PPOR? It may actually work on your favour to put your investing on the front burner.
     
  3. Sunnyb

    Sunnyb New Member

    Joined:
    18th Jan, 2016
    Posts:
    2
    Location:
    Sydney
    Thanks MsAli.
    I am planning to save at least 10% before taking my first step. Could you please guide me, if stamp duty and LMI are included in the loan or not. In my case, eg: for a property of 800k, do I need minimum 80k or 80k + stamp duty + LMI.
    Currently, I am focusing for PPOR as I do not want to pay $575 per week as a rent and do not want to take any risk in IP.
     
    MsAli likes this.
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,241
    Location:
    NSW
    You need min $80K +SD + LMI (unless you are a "professional" like a medico etc who get special deals).
     
  5. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    863
    Location:
    Sydney (West) and Canberra
    Hey @Sunnyb - Welcome to the forums.

    In answers to your question - to work out what you can fund - you essentially need answers to two questions:
    1. Borrowing power.
    2. Deposits.

    1. Borrowing power - while that info isn't enough to fully confirm - standard households on that income will have no issues at all purchasing a PPOR at that price point.

    2. Deposits - this is how much you contribute to a purchase. As a first home buyer, the amount required will partly depend on what your purchasing and whether you have access to grants. For example, purchasing a H&L package may get you access to the grant in NSW pending the value of the land your purchasing. It will be at the limits of their eligibility requirement.

    If you did access the grants and stamp duty waivers, you've got enough funds now to make it work with a high LVR (~95%).

    If you were purchasing an established place, and had no access to the grants, you will need at least a 5-7% deposit + stamp duty + other costs. The cost of LMI will also be quite high at that LVR - ~$25-30k. Much of this can be added onto the loan.

    Most first home owner occupier buyers typically end up being incentivised to buy new - it reduces the deposit size required, which is generally the limiting factor for first home buyers.

    Cheers,
    Redom
     
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  6. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
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    Location:
    Bali
    Are you aware that interest alone on an $800,000 PPOR (@90%) will be somewhere close to $700/week? If you have P&I loan it will push up closer to around $1100.

    Based on your income(s) you have a current tax liability of about $45,000/pa.

    Using your starting point ($50k), and investing smartly rather than buying into a PPOR you could find yourself in a position where the investment income pays the interest bill - plus with non-cash deductions find that the tax offsets will put more cash in your pocket at the end of the year.

    If I was you I would put off the idea of buying a (nearly $1mil) first home, and get a really solid foundation behind you first. You are in a great position to be able to achieve pretty much anything you want - if you do things smart.

    Blacky

    Note - you will need to seek your own proffesional advice and not rely on some randam dude on the internet.
     
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  7. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,624
    Location:
    Sydney
    Hi @Sunnyb. Welcome to the forum. I think it's important to tell us what your plans are. This will help determine what possible steps you can take from here.
    You don't mention a plan to grow a property portfolio. Also you mentioned that an IP would be risky. You should note that all IPs will carry some level of risk, regardless if you get it first or not. As @Blacky has mentioned in some instances it can actually help you get ahead if you purchase an IP first as the tax incentives can help reduce your taxable income which is reasonably high for a household also sometimes serviceability can be greater when you have income producing debt. In addition, cash flow can be improved depending on the IP. But if that isn't your plan then it's not relevant. Perhaps you are just interested at this stage to purchase a PPOR for you and your family? If that's the case then @Redom's tips above are very useful about how to go about things. As mentioned above all posts here should be used a guide only. For specific advice you should speak to the appropriate professionals.
     
    Leo2413 likes this.