First Home Buyer

[Ghosti]

Long winded post incoming >.<

Before I start, I have to let you all know that I'm just a dumb kid when it comes to this type of gear. I have very little financial knowledge so please forgive my ignorance and humor me if you can be f*cked.

Me and my Mrs. of 5 years are currently living in a rental property that belongs to her cousin who is currently overseas (=cheap rent). The cousin is expected back in about August/September of this year so we will have to vacate the premises by June/July at the latest.

Now a number of factors, including advice from a few family members, etc. have led us to believe that the next logical step would be to purchase a house, rather than continue renting.

On the surface (and to a layman) it seems like conditions may be quite good at the moment.

1. Interest rates expected to be cut again in the next month, bringing them to 40 year lows (apparently?).
   
2. The extra bonus to the First Home Buyers grant (which I hear may end in july??).
   
3. Property seems to be a buyers market at the moment with many people selling homes at the lower end of their price spectrum.
   

And lastly, the area we'd like to buy in (Frankston-South in Melbourne's S/E) is well and truly on it's way up in terms of property value, however there are currently still streets where you can buy a $300k property (in good condition) in between two neighbouring $400k+ properties.

There is also talk of a new BIG $$ marina being built in the immediate area which shouldn't hurt property values.

So I'm basically looking for constructive criticism on the idea of buying in the next 6 months. Any reasons why it's a bad idea, any advice on how to go about it and basically anything that we should be weary of.

I should also add that we spoke to a mortgage adviser in the middle of last year and he basically told us that with the first home buyers grant, we would need to add in roughly $10k of our own in order to get things rolling. We have $14k set aside at the moment.

He also told us after calculating our existing debts and our combined income, that we could theoretically borrow something like $450k or something ridiculous like that... We realise the absurdity of that and would never be stupid to enough to borrow that much in our situation.

We've done the sums ourselves and we're pretty sure that we could manage the repayments on $300k - $320kish as an upper limit.

We're both pretty daunted about it all yet excited at the same time.

Any help or advice would be greatly appreciated.

Cheers,

Clem

[XR06T]

sounds to me like you have thought it through. Book another meeting with a mortgage broker and see what he says. in this climate a $320k ish mortgage is <$500/week so it is not out of reach for most couples.

not to sure on the area, but I wouldn't be expecting huge growth in the next few years. if you can comfortable afford to buy, then buy imo. dont stretch yourself in this climate but, make sure mortgage repayments are not more than around 35% of total income, so there is some head room if the interest rates go up again in the next few years.

I am in this position myself now and im pretty comfortable.

[Dillz]

Mate you pretty much know all you need to know and to me it looks like you got it all sorted. Frankston will boom in the near future and at the moment you can get a pretty nice 3-4 Bedda around 300k. If you don't mind living there I say go for it.

[TUFXRT6]

It looks to me like you have everything under control.

I do agree with your broker that if you use caution & are realistic that you should look to borrow a little more as you are both young and with natural regression you will earn more as the years roll on & therefore the payments will become more manageable.

If you were older or didnt think that you will earn more then I say borrow as little as possible.

Regards

TUFXRT6

[ronburgundy]

If you're worried about 'wiggle room' if rates go up, fix your rate, or try and get a product that will allow you to at least fix a portion of your loan.

I'm looking to fix half mine soon I think - I'd fix all of it but by doing so really what I'm saying is that I'm better able to predict interest rate futures than ANZ's panel of gurus. Not a gamble I'm willing to take!

[RHR]

Get in the market now. We did around 4 months ago and due to interest rates dropping now we have saved around 500 smackers a month. Whats great is that $500 is still being paid off the loan

[FPV TRANNY]

Im going against the grain with everyone on this and say just hold out a little longer.Property will come off a lot more yet.From what we are seeing at the momment is a realistic slow down of the economy and will get much worse.Its only a matter of time.

What you should be thinking is how stable is your employment?

What if you get cut back on some work?

What if the company you work for starts to struggle in the coming recession?

What if your self employed.Can you handle a slow down in work?

These are some important factors to think of before borrowing money.Dont borrow anymore then you need cause the trend is to borrow more and pay later.Alot of cases im seeing is people over borrowing and and under mortgage and debt stress.

If your quite comfortable with you repayments and not over ticked,then I say just wait a little longer and watch the market and the go for it.

Hey but that's my opinion.

Good Luck!

[xr6t_ute]

..................Just factor in, can u afford it if one loses there job......its gonna get tight real soon.....

[ebxmple]

I reckon go for it mate. If you think you can afford it after all the thought you have put into it,you will be fine. Even if you got paid more you end up adjusting your lifestyle to suit without even knowing it and their never seems to be enough money in your hand. Start whilst your young and you will mould into a routine which will pay for it with no problems. If ever you get into strife you can always sell the house which you cant do if your just paying rent. Its not a house that your buying its an assett and aslong as you have that,you have something to fall back on if sh*t hits the fan. If ever I get a pay rise my car seems to go faster and the more toys I get lol,which is bad in a way cos I should be trying to pay the mortgage off asap. Hey, I am happy and that's all that counts right now,so enjoy your life and buy yourself a house,you wont look back after your routine sets in.

[Dillz]

You guys read to many news papers, I agree you shouldn't borrow more then you can afford but if your gonna sit round and wait till house prices "bottom out" then your gonna be sitting around for a while.