PPOR Brisbane - buy now for cash or wait for finance

Discussion in 'What to buy' started by chewmylegoff, 26th Oct, 2021.

Join Australia's most dynamic and respected property investment community
  1. chewmylegoff

    chewmylegoff Well-Known Member

    Joined:
    19th Oct, 2021
    Posts:
    223
    Location:
    Brisbane
    Just looking for some thoughts on this decision.

    Have recently moved back to Brisbane after 20 years in the UK. Have just started work, as has my other half, so I reckon it will be 3 months or so until we can get a mortgage.

    Right now we can afford to pay about $1.15m in cash before stamp duty and other costs. That will probably get us a small unrenovated 3 bed on 405m2 in the area we are looking at. In due course we could then re-finance and then lift it and build under and update the existing floor.

    If we wait, our budget would be more like $1.7m-$2m (we could prob borrow quite a bit more unless lending rules tighten very significantly but really don’t want a mortgage bigger than $1m) which would - at least right now - get us a renovated 4/5 bedder on a bigger plot.

    Torn as to what to do. Logically I feel like we should just wait (we have to live with the in laws in the interim which is not ideal esp. with kids and commute + school run is painful but manageable) but in the current market environment I’m concerned about passing up the opportunity to get on the ladder as it feels like the market is running away from us.

    That said it’s only another 3 months or so to wait so perhaps the downside risk is prices moving 10% against us which would be offset by the convenience of buying somewhere which is already done and not having to deal with a major building project (involving moving back in with the in laws for 6 months) in a couple of years.

    Any thoughts? This all seemed like it would be easier when we were planning this move back looking at mid-2020 sales info!!
     
  2. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    6,776
    Location:
    ....UKI nth nsw ....
    It will depend on the area within the BCC catchment you are looking at ..Because RE agents I know have waiting lists with people like yourself so the competition between buyers maybe is only starting in Brisbane.
    Myself invest now as in six months time in some small pockets it could be 100k plus more so invest now as everything is difficult to price,and for good reason..
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    many lenders will work off one payslip subject to few things

    ta

    rolf
     
    Terry_w likes this.
  4. chewmylegoff

    chewmylegoff Well-Known Member

    Joined:
    19th Oct, 2021
    Posts:
    223
    Location:
    Brisbane
    Presumably that would make things more expensive?

    I’ve just started, salary is $170k and my other half is on $125k - both full time. Do you reckon we could realistically borrow $750k+ this side of christmas without paying a punitive interest rate / insurance costs? Obviously we can provide evidence of previous income in UK but presume that’s basically irrelevant now.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    Yes, and previous history of similar work will help.

    Many a mainstream lender will do this

    ta
    rolf
     
    Stoffo likes this.
  6. boganfromlogan

    boganfromlogan Well-Known Member

    Joined:
    10th Jan, 2017
    Posts:
    3,332
    Location:
    Brisbane
    Search for finance straight away, and good luck
     
  7. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    This is a strange question.
    Normally, there would be a preference between the unrenovated 3 bed for 1m and renovated 1.7/1.8. You don't show this. Assume this is because you don't want to take on debt at all if you could help it? This is why you are assuming you can't get finance instead of talking to a mortgage broker to make it happen.

    But consider that putting all your cash into the 1m property would actually kill all of your liquidity and make it harder to take advantage of a crash, if it happens.

    e.g. buy the 1m unrenovated with 80% LVR and keep the rest of the cash?

    Also depends on what other investments you have.
     
    Last edited: 26th Oct, 2021
  8. chewmylegoff

    chewmylegoff Well-Known Member

    Joined:
    19th Oct, 2021
    Posts:
    223
    Location:
    Brisbane
    I’m not 100% sure what my preference is - I can see benefit to both (essentially route 1 means we can design the property exactly as we want; route 2 is more convenient and prob more expensive), but overall I probably prefer the certainty of getting something now as long as we don’t have to compromise on location. Happy to take a small house that we can improve in the right place but not a bigger, better house in a location that doesn’t work for us long term.

    I’m not averse to taking on debt at all - and even if we buy for cash now we would then want to mortgage the property in due course - I just didn’t think it was possible as stuff I had read suggested you needed to be out of probation at work and have at least 3 months of payslips from current job - given the v helpful comments here I will be immediately exploring our options.
     
  9. vbplease

    vbplease Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,575
    Location:
    Brisbane
    I tend to think route 2 will be more expensive.. once you factor in renovation costs (which are skyrocketing by the month), then its typically cheaper to buy renovated. Particularly for a character home (you mentioned earlier a raise and build under project?).
    If it were me, I'd look into organising finance asap and buy the renovated ($1.9m) property now.. save your family the renovating nightmare. Unless buying a character house is important to you and you want to put your own stamp on it.
     
  10. Colin Rice

    Colin Rice Mortgage Broker Business Member

    Joined:
    9th Jul, 2015
    Posts:
    3,183
    Location:
    Perth
    Won't do you any harm and hopefully a lot of good to chat to a broker and get them to "run the numbers" to see what's possible, there are some decent operators on here so have a read and see who you resonate with, cheers.
     
  11. thunderstrike888

    thunderstrike888 Well-Known Member

    Joined:
    6th Jan, 2021
    Posts:
    2,018
    Location:
    Sydney
    3 months is a VERY VERZY long time in this market. It could mean a price difference of $500k+ in the upper end of the market or around $200k-$250k+ in the lower end of the market. Both life changing amounts of money.

    Trying to make up and "save" $200k in cash would not be a smart choice and as long as the price of housing rises you wont be able to save at the rate the houses are increasing no matter where you look.
     
  12. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,791
    Location:
    Sydney NSW
    At sub 80% LVR there will be plenty of options with good lenders.

    Some will issue a pre-approval on an employment contract subject with receipt of first payslip as a condition of formal approval.
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Avoid paying cash if you can.
     
  14. Patrick Bateman

    Patrick Bateman Well-Known Member

    Joined:
    12th Nov, 2017
    Posts:
    2,567
    Location:
    Brisbane
    What area are you looking at for your purchase ?
     
  15. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    5,301
    Location:
    In the Tweed
    Go for broke and buy asap :D

    Negotiate a long settlement, 3 months min and max deposit of 5% ;)

    This way you get to buy locking in at todays price, then you will have almost 3 months to sort finance :)

    Have done it previously, it is stressfull but as you have considerable funds toward the purchase you should be fine
     
  16. Patrick Bateman

    Patrick Bateman Well-Known Member

    Joined:
    12th Nov, 2017
    Posts:
    2,567
    Location:
    Brisbane
    No one is going to agree to a 3 month settlement in the current market unless you want to pay waaaaay overs
     
  17. chewmylegoff

    chewmylegoff Well-Known Member

    Joined:
    19th Oct, 2021
    Posts:
    223
    Location:
    Brisbane
    Looking 4075 and around - going down the finance route, don’t want to jinx it but we’re getting there I think!
     
    Patrick Bateman likes this.
  18. Patrick Bateman

    Patrick Bateman Well-Known Member

    Joined:
    12th Nov, 2017
    Posts:
    2,567
    Location:
    Brisbane
    Nice mate . Lovely area are you already living locally? I would recommend going back and forward a few times on Walter Taylor a few times at peak times to see if that changes your mind . Maybe consider Indooroopilly and Taringa as well ?
     
  19. chewmylegoff

    chewmylegoff Well-Known Member

    Joined:
    19th Oct, 2021
    Posts:
    223
    Location:
    Brisbane
    Know the area reasonably well - and kids are in school at graceville, at the mo we are having to drive up every day from forest lake then get the train on to work, so traffic on the bridge not an issue for us - but wouldn’t go the other side of the bridge cos of school. They’ll go through the catholic system so state catchments isn’t an issue.
     
    Patrick Bateman likes this.
  20. Patrick Bateman

    Patrick Bateman Well-Known Member

    Joined:
    12th Nov, 2017
    Posts:
    2,567
    Location:
    Brisbane
    Awesome mate , beautiful area you are buying in very good move
     

We provide our clients with the opportunity to select their own investments from a wide range of ASX listed securities. We provide the research to ensure your selections will achieve the goals. This is the value of advice.