Home Loans

[Azid Rush]

hey everybody how r we?

Well I dont know too much about this topic and considering its saturday and nothings open, thought id throw it out there and see if anybody can give me a rough idea, although I think I know the answer.

heres how it is: I have a personal loan that I am currently paying off for my car and other things. Me and my girlfriend are thinking about buying our first home soon.

My question is: Is there any home loans available that can lend u the money for the home, plus my currently existing loan so we can pay off just the one loan?

for example.. say we purchase a home for 300,000. Will any home loans lend u 320,000 to pay off my currently existing loan aswell as home. So we only have to pay off the one loan

thankyou for any help you might give me as this is important to us, and may help our future.

Thankyou

Az

[Dillz]

Hi Mate,

There are alot of factors that come in to it when getting a home loan, the main two being your income and assets. If you could over come the personal loan before you go for a home loan it will definetly help you out. Don't forget the interest accumelated for say 20k tacked onto a 7.34% homeloan will infact be a hell of a lot more over the say 30 year term then it would be if it was a seperate personal loan for 20k over 5years at say 10%.

Does that make sense?

[Azid Rush]

yeh that makes sense.. income and assets wont be a problem as between me and my gf, out yearly is around 100k.

but yeh it does make sense, leave the loan by itself so interest isnt as much cheers mate

still like to know though if it is possibly to join the 2

[ZAP]

Some non bank lenders will lend up to 120%, but is comes with a big penalty in intrest rates.

If you do not have atleast 10% deposit + extra for the stamp duty, moving costs, etc, then I suggest you start saving.

Just because you have the income to pay off the loan, there are many factors that will affect them lending you the cash.

[AceofSpades]

My family own a wizard finace buisness and its run by an uncle.

He told me the best way is to knock the personal loan out, because that comes off your borrowing capacity.

To use the calculators online to work out stamp duty and other payable costs over and above property purchase then save that amount + 10% of purchase price.

My personal opinion is also to not borrow to close to your upper limit. This gives breathing room for any rate rises or change of curcamstances ( job changes resulting in lower income..)

if you have any specific questions, I can pass them on and get his answer.

[Dannopower]

Some non bank lenders will lend up to 120%, but is comes with a big penalty in intrest rates.

If you do not have atleast 10% deposit + extra for the stamp duty, moving costs, etc, then I suggest you start saving.

Just because you have the income to pay off the loan, there are many factors that will affect them lending you the cash.

Exactly right.

My fiance and I bought our first house last year for $350k. I tried borrowing more money than I needed to include renovation works with the finance, but wasnt able to get it. So I started the work financing the reno's myself, and am still going. Its taken longer than I would have liked, but I dont have any extra debt, so no extra interest to pay. It should be ready in a few months, has cost me about an extra 50k but will add over 100k to the value of the property.

Best thing for you to do is start saving right now. Work out what the repayments are on a mortgage for the amount you want to spend, and pretend your paying it off but put it in the bank. This will give you an idea of what your in for.

Set up a high interest earning savings account such as ANZ V2 or Maquarie cash management trust, they should give you about 6% interest on your savings. Work out what the maximum you can afford to repay, take about 20% off that figure to allow for interest rate rises and anything that may jump up at you. Its always way better to borrow less and pay more off the loan than you need to than to pay off to the standard payments. This saves thousands and years off the mortgage.

Remember, if you have less than 10% deposit you must pay mortgage lenders insurance, which can be added to the loan provided you have at least 5% deposit in most cases.

Getting a decent deposit together after paying mortgage insurance, stamp duty, solicitors fees, loan establishment fees, building and pest inspections is the hard part. Just cause you may have 20% of the cost of the property keep in mind you will chew a fair chunk up with this crap.

Good luck, hope this helps.

[YPURV4]

Well with me, as I just did what your asking.

My fiancee and I went to a mortgage broker, and basically he found a lended com bank, which we borrowed a personal loan of $30k to pay off the miss's car, credit cards ra ra ra, then when we got the house loan through the com bank they gave us enough for the house and to pay off the personal loan. So now every thing is one payment which is easy.

so it was win win, but we have a pretty good income between us so I dont know if that came into play.

So it can be done I would recommend a mortgage broker.

[xr6 typhoon]

If your saving for a deposit on a house aim for no less than 20% of the total house price. This way you should have no problems getting a loan with the big 4 banks. A good term deposit account to help you save your deposit for the house would be ING online account. Its earning about 7.30% depending how long you keep it in there.

[Nazgul]

This is a question that I get asked all the time.

There are several ways you can do this.

1. Some non conforming lenders will lend you more than the purchase price of the property. This is not usually for consolidation of debt, but rather to cover the purchase price + costs. The Fees, Lenders Mortgage Insurance and Interest rates usually make this option a poor one and rarely does it make financial sense.

2. Many major lenders will do what is called Family Equity lending. This is where you parents, sisters, uncle etc put up their property as collateral security for your loan. Ie the bank takes both your house and theirs as security for the loan. Most lenders have limits of 100% of purchase price, a couple of 105% limits a couple don't really mind the %. This can be done even behind the current mortgage they have in their property. The second bank just takes a dead of priority outlining the debt secured by the first mortgage. This may sound risky but it is very common practice now and there are smart ways of limiting the risk involved. (Income protection insurance, limiting the debt against the family members security etc.)

3. Do a combination personal loan and home loan. Ie borrow 95% of the purchase price of the home and get a personal loan for another 10-15%. We usually do this with the home loan Interest Only so you can concentrate on paying down the higher interest personal loan. Several lenders will auto approve the personal loan side of things for this purpose with your home loan. This will not achieve your aim of having one repayment.

In response to Dannopower, you can usually achieve what you wanted. Most lenders will allow you to do a loan based on an "As complete" valuation. Ie they will lend against the projected value of the property after the renovations are completed. This is the way thay banks lend for construction of houses. The same principals can be applied to renovations.

While a 20% deposit is optimum for avoiding Lenders Mortgage Insurance it is not very practical for most people to achieve in buying their first house. We can avoid LMI with 15% deposits now too! You can borrow 95% + LMI at standard rates and terms now with all major lenders. The big 4 also have 100% lends too. Though they are a bit misleading in that they are 100% less the LMI where 95% loans they lend you the LMI on top (Really 97% aprox )

Jimmy

Edited 14/01/08 10:15 AM by Nazgul

[TUFXRT6]

Azid Rush,

I work in treasury & this has been a point of argument a few times. Excluding the 20% deposit & actually getting a loan etc, etc is it better to.

-Use your home loan to finance other purchases like cars because as a retail investor its the cheapest form of funding.

There are loans in the market that will let investors pool all their income into the home loan account effectively enabling them to draw down to use as funding going forward BUT......

-Do you want to be paying for your car & other purchases that wont have relevance in 10- 15 years time?

Anyway My 2 cents rounded up to 5.

Regards

TUFXRT6