unsure about this...what do you think?

Discussion in 'Property Finance' started by Ploink, 29th Jan, 2016.

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  1. Ploink

    Ploink New Member

    29th Jan, 2016
    We want to buy a block of land for $90-95,000 and build a small 2br prefab house at 72m2 for $90-95000. We want to live together in the house for 2 - 5 years and then rent it out.

    We're two male friends in our late-ish twenties. We've lived together for 8 years, and just the two of us for the past 4 years renting a house together at $310pw. My mate is working FT in the last year of an apprenticeship, and Im working PT two days per week (and looking for another PT job) and studying a bachelor's degree PT. Current combined earnings of merely $60,000 a year after tax. Both eligible for the FHOG.

    We'd need to get a loan but we don't have much in the way of savings. I've read that some lenders allow rental history as genuine savings and that could allow us to get a 95%LVR loan with mortgage insurance (which from what I've seen could be around $5,000 over the life of the loan?). But I assume we can expect a higher interest rate with a 95%LVR loan? Anyone know what we should expect?

    If we intended on living in the house for only two to five years and then renting it out, would we need to get an investment loan opposed to an owner occupier loan? If so, is the FHOG still applicable to an investment property?

    Regarding the FHOG, where in the process does that come in? This might seem a bit silly but I don't really get it. Say we need $190k to buy land and build and have a $9,000 deposit. Do we get a loan for $181k and then take $10,000 off the cost of the loan, or do we get a loan for $171k (the 190k cost minus 9k deposit minus 10k fhog)...or something else entirely?

    How likely does it seem that we'd be able to get the finance on this? I figure we shouldn't have a problem...relatively, of course. I mean, according to online repayments calculators a $181k loan at 5.7% over 25 years and including mortgage insurance is ~$265pw...that's $45 less per week than we've been paying in rent for the past 4 years. The lack of deposit seems troublesome yet not insurmountable.

    Any help or guidance will be much appreciated.

  2. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

    12th Jul, 2015
    Melbourne, Australia
    Hi @Ploink

    The easiest thing to do is speak to one of the good brokers on these forums. They will be able to determine what you are able to borrow.
  3. Property Twins

    Property Twins Mortgage Brokers - Australia Wide Business Plus Member

    18th Jun, 2015
    Sydney, Australia

    I would suggest against buying with friends.

    When do you expect to finish uni? What are you expecting to earn then?