Maximum purchase price with savings of 100K?

Discussion in 'Loans & Mortgage Brokers' started by Sail, 29th Jun, 2020.

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  1. Sail

    Sail Active Member

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    I'm a first home buyer, and I'm looking to buy units/villas (not apartments) in South East Melbourne but they usually go for around 700-800k. Wondering if I should try for 95% LVR loans or lower my budget and go for 90% LVR (lower risk than 95%). I have saved 100k and with 95% LVR I can aim for these villa units.

    Also, how will a conditional pre-approvals for 95% LVR loans work in case of auctions where you have to put down 10% deposit? Hope I'm making sense.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    With $100k as a first home buyer in Victoria, you're going to have a maximum purchase price of about $720,000. The base loan amount would be about $655,000 with the LMI capitalised.

    The rest of your deposit would go to stamp duty and other costs, you wouldn't get much change from the $100k (if any).

    That's all subject to serviceability, the other part of the equation.

    For a loan above 90% LVR you're going to have limited lender options and pay premium LMI and interest rates. If at all possible, considering saving about another 3% - 4% as this would get you into the 90% LVR price point. Much better rates and about half the LMI costs.



    As for the deposit at auction, the agents say they want 10%, but that's negotiable. There's nothing stopping you from negotiating a 5% deposit or even less. You could also negotiate a deposit bond for the full 10%.

    A nasty but effective way to negotiate this is to wait until your pen is hovering over the contract. You're just about to make it official then hesitate and ask, "You guys are okay with a 5% deposit aren't you?"

    Alternately I've never heard of an agent refusing a 5% deposit if you ask nicely prior to the auction.
     
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  3. Sail

    Sail Active Member

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    Thanks for your response. Really appreciate it.

    Would you have an idea which banks provide these loans? Also, do they cap the loan amount to any particular amount?
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Quite a few lenders allow 95% loans. The best lender is going to depend on your circumstances. There are maximum loan amounts for 95% LVR, but that's at lease double the budget a $100k deposit would allow.

    Keep in mind deposit is only half the equation, you also need the income to be able to afford the repayments on the loan (based on the lenders criteria, not your own budget).
     
  5. Sail

    Sail Active Member

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    Yes definitely. Would surely not want to go for a million dollar loan, just because it's possible theoretically. But good to know that stretching a little over 700-750k is possible.
     
  6. The Y-man

    The Y-man Moderator Staff Member

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    ....assuming you are earning enough to qualify for a loan.

    A retiree with $300k deposit may still be refused a loan to buy a $700k property...

    The Y-man
     
  7. The Y-man

    The Y-man Moderator Staff Member

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    Conditional pre-approvals mean jack for auctions in terms of actually being able to get the loan BTW - auctions are unconditional, and the bank can pull a conditional pre-approval based on any number of things - including the weather forecast for the coming thursday.

    The Y-man
     
  8. Sail

    Sail Active Member

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    Yup, our max borrowing capacity is close to 1.2 million$.
     
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  9. Sail

    Sail Active Member

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    Yes, will be eyeing private sales and off-market properties. I'll avoid auctions if possible.
     
  10. The Y-man

    The Y-man Moderator Staff Member

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    Should be plenty of pass-ins according to this thread! :)
    Second Wave sends Clearance rate down to just 59.4% [VIC]

    Having said that, I personally know about 4 people running around looking for a "deal" right now, but it's pretty tight...

    The Y-man
     
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  11. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Depending on which bank you go to there might be LVR restrictions on that postcode with units.
     
  12. Sail

    Sail Active Member

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    That's right, I personally know 3-4 private sale villas in my price range.
    Are the postcode restrictions only for apartments or even villa units and townhouses?