Is a $420,000 property achievable with a $28k deposit?

Hi all,

Looking for some prelim advice here before I meet with a bank or mortgage broker for further information.

I'm 32 years old, with a young family (2 dependants) on a base gross salary of $100k in a job i've been in for 6 years now. My wife works permanent part-time 20 hours a week, and earns about $27k gross per year. Additionally, I own and run (under my wife's name because of the lower tax rate) an at home e-commerce business which achieves a net profit before tax of about $35k per annum.

We have rented for 6 years in Sydney, and in that time paid weekly rents anywhere between $500 - $700 per week (currently we're paying $660pw). Currently, after all our expenditure, rent etc, we're saving about $600pw (or $31k a year) as a family.

We're looking to stop paying someone else's mortgage and finally get our first property. We're originally from Brisbane and are looking to buy in Brisbane (a $420k house). We currently have $28k cash + a $20k asset being a vehicle which we own outright with no debt.

We're actually interested in relocating back to Brisbane and living in the house as a preferred option, but this is complicated as we obviously both need a new job in Brisbane to do that, which is possible but then we run the risk of the banks not giving us a loan because of our fresh jobs and lack of security. The other option is to buy the property as an investment, whilst on our current secure stable salaries and then relocating back to Brisbane at a later date. This however, from what I understand will mean we have to pay about $13k in QLD stamp duty, as it's an investment property. I understand if it was owner occupied we'd qualify for a stamp duty concession, eliminating the $13k duty payment. So I guess it's a catch 22 for us...

After reviewing all of the above, I wonder if anyone could share their knowledge or experiences on what the best solution for us could be? We want to avoid paying fees as much as possible, but understand we'll probably need to pay $9k of LMI because we won't have a 20% deposit. Interested in information on interest only loans as well or any work around or option that could be ideal for us.

Also, would we qualify for a loan of say $400k with our $28k deposit and 2 dependants on decent terms or would we be disadvantaged because we don't have the 20% deposit?

Cheers in advance.

 

You'll need to speak to a broker, which I'd strongly recommend over the bank directly.

If you're paying 13k stamp duty 15k isn't a 5% deposit, I'm not aware of a lender that will finance that. Some lenders will still go to 95%. You will be paying a large amount of loan mortgage insurance (LMI) with a 95% lend. Anything over 80% lend will in general incur some LMI, which increases at higher leverage.

High LMI can be worth it in a growing market IMO. Once lending is below 90% it decreases by quite a bit.

If you change jobs it may create some other issues with job history so speak to your broker about that idea too.

 

I have a feeling you might be able to have your cake and eat it too re. First home buyers grant (which I'm assuming is how the stamp duty is being waived), - there's normally a period you have to move into the property, eg in NSW it was within the first 12 months. You can buy it then move in during the later end of the period. This should help get it over the line with the banks.
Make sure you use a good broker - I recommend interstellar finance (that's who I use).

 

Potentially possible pending a whole bunch of verifications - especially if bought as an owner occupied residence.

In terms of moving back to Bris, changing jobs isn't too much of an issue for lenders these days - depending if the role is permanent or casual will dictate whether you need to show only your first payslip or 3+ months of history in the new role.