VIC Location and budget questions. Total newbie.

Hi there,

My wife and I are looking at purchasing a home in the next few years. We’re total rookies and don’t really know what to expect. But I have a few initial questions about location and what to budget for.

- We make around 110-130k income yr
- Have around 30k debt that we’d pay off before approaching lenders
- Not sure how much we could afford but we're looking at Bon Beach or Footscray for our first home (we’d live in it).
- Kids on the menu in a few years I suppose.
- My parents have generously offered to be guarantors for a loan - but they live abroad (NZ) any reason this wouldn’t work for us?

Just wanting to know what you’d guys recommend in terms of budget and what we could realistically expect to purchase without breaking the bank. We’re thinking at least a 2 bedder townhouse/unit. Prefer by the beach but not sold on this. I don’t mind 30-40mins train commute to the city for work.

Any help would be much appreciated. Thanks in advance guys.

Cheers,

 

Hi there,

My wife and I are looking at purchasing a home in the next few years. We’re total rookies and don’t really know what to expect. But I have a few initial questions about location and what to budget for.

- We make around 110-130k income yr
- Have around 30k debt that we’d pay off before approaching lenders
- Not sure how much we could afford but we're looking at Bon Beach or Footscray for our first home (we’d live in it).
- Kids on the menu in a few years I suppose.
- My parents have generously offered to be guarantors for a loan - but they live abroad (NZ) any reason this wouldn’t work for us?

Just wanting to know what you’d guys recommend in terms of budget and what we could realistically expect to purchase without breaking the bank. We’re thinking at least a 2 bedder townhouse/unit. Prefer by the beach but not sold on this. I don’t mind 30-40mins train commute to the city for work.

Any help would be much appreciated. Thanks in advance guys.

Cheers,

 

It's a bit light on detail to give an accurate answer here but rough estimate is ~$750K loan using the income of $110K combined, split evenly.
Suggest engaging a mortgage broker to run the actual numbers for you based on real data to get an accurate answer.
Do you have any funds saved for the deposit?
Parents in NZ as guarantors won't work, lenders won't like it

 

Thanks for the response. I appreciate it.

Nothing saved at all so far. So was hoping the guarantor thing would help us out there once the debt was paid off. Sounds like that might be difficult though.

 

Sorry, completely forgot to mention we will have around 30-50k shares we're hoping to sell to act as a deposit fund too.

 

If parents have property in Aus they may be able to offer equity guarantee/release some equity to give to you for deposit this depends on a few factors though.
Banks will typically only lend you up to 95 - 98% of the property value MAX including Lenders Mortgage Insurance, which in reality works out to be 92-94% of the value of the property in real terms - you need to have funds to make up the shortfall plus state charges, solicitor fees, building and pest etc etc.
Important to understand these things BEFORE you pay down that debt as you might be better off keeping the debt and using the funds that you were going to use to pay it off (potential sale of shares) towards the property purchase BUT having the debt will reduce your borrowing capacity so there a some factors to consider.
Good time to speak to a broker about it

 

Thank you so much. That is super helpful. Looks like I have some research to do in terms of finding a good broker. Cheers

 

Some of the best are members on this forum

 

Hi BPD,

When buying our first place my wife and I found a good mortgage broker who was able to assess our situation, expenses and goals to determine the right budget for us. They also explained the home buying process & financial aspects of home ownership. You might benefit from doing the same. Below is some advice from my personal experience going through the same process:

1. Remove as much debt as you can before purchasing
2. Aim to pay off more than the minimum repayments. This will give you a safety buffer in the future in case you are unable to make payments (e.g. you have kids and go down to single salary).
3. Even with a guarantor you may need to find the money for a deposit up front - check this with your broker/bank
4. There are lots of calculators online for working out how much you can borrow and what the repayments would be. Try searching for "borrowing power calculator" and "mortgage repayment calculator" to get an idea of how much the bank may lend you and what repayments would look like on a property you're interested in.

Good luck!

 

Awesome. Thanks so much for your response. Lots of good info here. I agree, I think the next best bet is to approach a trusted mortgage broker and find out some finer details. Cheers

 

Is this a duplicate of Location and budget questions. Total newbie. [VIC]

 

Yeah, apologies. I realised I might have posted in the wrong channel first up. Happy to remove if it's a problem.

 

Agree with a lot of what was mentioned except for the above quoted section
The online calculators you mention are actually fairly useless for working out true borrowing capacity, they can tell you what to expect regarding monthly repayment amounts but nothing more.

 

Moderator might merge them into one for you

 

That's true, they are not useful for true borrowing power. I find they provide a figure that is much higher than what I'd feel comfortable borrowing, but the breakdown of income, expenses & repayments is somewhat useful.

 

On 750k you can go for west foots/seddon if you like inner city lifestyle, convenience and food. Prob avoid those narrow reverse living plan townies (living space on second floor) - too many are popping up, questionable materials and wont appeal to entire rental/buyer market. General air pollution (nearby Brooklyn is know for its terrible air quality) and having sun in eyes when driving to and from city for work are probably the main downsides. Alternatively moonee ponds/maribyrnong/ascot vale also has similar lifestyle appeal without the two downsides mentioned.

If you like the beach then the entire frankston to parkdale stretch of sand is very good going. Just becareful of old wetland areas due to risk of rising sea levels, and pockets of govt housing. Parkdale is the closest by train and has decent schools. Frankston is being held back by lack of express train services to cbd so may not be viable.