Sanity check - small deposit, 2 year to flip

Hi all

Just wanted to do a quick sanity check on what I'm getting myself into. Appreciate honest feedback.

My fiance and I are looking to buy in the Canberra region. We're hoping to get a place before the end of the year. We need to buy fairly quickly, for reasons that aren't important. Just take that as given.

We have a small deposit (60k), but good serviceability - 210k p.a. income, very low expenses. We've talked to a MB and been advised we can get $561,000 - to get us to $600k plus expenses. This is a sweet spot as we'll qualify for the FHLDS, meaning we won't pay LMI, and will be exempt from transfer duty.

Our MB has suggested we go through an industry mutual fund, who are offering 2.2%, 100% offset over 2 years.

The plan is to get into a 600k 3br townhouse in Queanbeyan (ACT border town). We can pay 4k (plus change) a month for those 2 years, and hopefully come out of it with $110k, plus any capital gains, to roll into a better house in Canberra.

Is this wishful thinking? Have I missed anything obvious? Is there anything I should start planning now?

TIA.

 

Try to get a house!!

 

I wish I could, the figures just don't add up. I talked to MB on Friday and they advised it would cost $40k to get our budget to $650k because we would lose FHLDS. There are literally 0 houses in our price range. Canberra and surrounds have exploded over the last 12 months.

We're renting at $1870 a month right now, and the repayments on buying at $600k would be $2.1k-ish. It just seems going with this mediocre plan is much better than nothing.

 

Buying now makes sense for your situation. But in 2 yrs, the gap between a house and a TH could grow bigger. Your extra repayment and CG may not be enough for 20% deposit for a house? Will you be ok paying LMI and stamp duty when you buy a house in 2 yr?

Have you got plans to manage that risk?

 

Hi @Derpy and welcome to the forum.
Yes it's a good plan, on that sort of income I'm surprised you haven't taken the leap earlier
You could save every cent, borrow from family, sell a car/shares (I've done all at once) to get into the house I couldn't afford
I didn't have even close to enough savings or servicability, and 80 days later when settlement was closing in I started selling off (but made it).

It is often said that it is "the time in the market" that matters, so if you can find a townhouse that ticks most of your box's then go for it (just make sure it ticks the box's for an IP also, for later)
Make sure you pay min repayments with any extra you have paid into the offset account
2 years will fly past, save hard for that house and turn the townhouse into an IP