Advice for First Home. What Would You Do?

J4Jayden on 12/05/2020 - 13:28
Last edited 12/05/2020 - 14:26

Hi Everyone!

First of all, I know I can go to a real estate but I am just worried that I might not get the real deal advice like I can here. I trust real people feedback and advice more than a business.

I am looking at getting into an apartment under 250000 with 5% deposit and LMI. I have been renting for about 9 years now. I am an immigrant so don't really have the option for a guarantor.

The questions is, is it worth getting into an apartment or should I keep saving for another year and maybe get a place about 40-45 minutes drive west of Melbourne CBD with it's own little piece of land?

I just really want a place for myself. I am sick of moving every year and paying rent.

Thank you for taking the time out and providing me some insights.

Edit: I do have about 15% saved up I am keeping the other 10% for emergencies & to support the business that I have. Maybe it's just better if I keep renting and keep saving more.

Home & Garden

Comments

    • Pyrocentric on 13/05/2020 - 11:39

      ^^ This - and if you do decide to move into the market I would target areas that have already been hit hard.

      Thinking well outside the box if your business will allow it think about a move, Perth for example got smashed over the last half a decade and you can buy an apartment for 100K or a house for 2-250K. The WA government also offers a first home buyer mortgage to WA residents called Keystart with low deposit and no LMI.

      • netjock on 13/05/2020 - 21:14
        +1

        Problem with WA is the only prices that should have gone up is near long life tier 1 mines.

  • trapper on 13/05/2020 - 11:05

    In nine years you only saved $12,500 deposit?

  • lainey13 on 13/05/2020 - 11:12
    -1

    You didn't have to move every year…

    • ratman on 14/05/2020 - 07:25
      -1

      He is renting. This is true for most renters. There are some lucky ones that don't have to uproot so often though.

      • nephilim on 14/05/2020 - 17:44
        +1

        Plenty of investors want long term Tenants, talk to your friends and coworkers with investment houses. I mean 10,000s of people with disabilities live in group homes with insanely long (5-10 year) rent agreements.
        That rent agreement can pay off 1/3 of the house in 10 years in cheaper states like SA after tax and expenses

        • ratman on 14/05/2020 - 18:01
          -1

          Geez mate hardly worth a neg.

          Yes defense and social housing are good for long term, id be surprised if thats the majority of renters, and OP clearly isnt either.

          Everyone i know who owns and rents out their place is constantly complaining about tennents bugging them to do things like supplying a working hot water system or a stove, or working locks. In fact the last person I asked about this had just kicked their tennents out because leaving the house empty was less hassle then dealing with filthy peasant renters.

  • funnysht on 13/05/2020 - 11:34

    If you're planning to buy an apartment read the stuff on cladding- it's costing a lot for strata to replace these cladding.

  • RADICALIST on 13/05/2020 - 13:14
    +2

    Keep saving. It took me 3 years to save 200k for my house deposit. You will be financially better off with a large deposit

    • doridori222 on 13/05/2020 - 23:25

      How did you manage to do that? Any tips?

      • RADICALIST on 14/05/2020 - 00:30

        It was my wife and I during the 3 years. We just saved, worked extra where possible and kept expenses very very low.

      • Jugganautx on 14/05/2020 - 02:43

        Having a $100k+ a year helps. Lol

        In saying that I saved $70k in 3 years on 34k p.a at Woolies.

      • ratman on 14/05/2020 - 07:27

        Simple. Just get a good job thats pays good.

        And invest in more coal.

  • frondono on 13/05/2020 - 13:37

    Do you qualify for keystart? might be worth looking into.

    • PissLUR on 19/05/2020 - 20:51

      Keystart is only applicable in WA.

  • BestofOZB on 13/05/2020 - 13:50
    -1

    Good on you, get into the property market as soon as you can.

    I would also suggest 20% deposit, LMI is wasted money, and most people above are right, lenders won't lend for more thank 80% LVR unless at very high rate.

    Generally speaking, buy a house.

    If you know you will be single for 5 to 10 years, and an apartment is very close to where you work and suits your lifestyle, then buy an apartment, then get a house later (without selling the apartment if you can).

    Don't forget rates and strata could easily be up to 10k a year.

    Good luck.

    • Scythic on 14/05/2020 - 09:47
      -1

      Don't know why this get neg

      It's silly to pay LMI. 20% deposit is a must, unless you want to be drown in debt

  • Stromae on 13/05/2020 - 14:00
    +3

    Keep saving. Do not rush to buy now, as prices are coming down.

  • Euphemistic on 13/05/2020 - 14:27

    Question 1: where do you want to live both locations and apartment or house?. You are the one to answer that and it will guide you to a purchase.

    Personally I don’t want to live in an apartment but conversely don’t want to live mikes away from work and spend half my life commuting. I’d be saving a lot more to spend more.

  • seabombs on 13/05/2020 - 14:54
    -1

    https://www.vic.gov.au/homesvic-shared-equity-initiative

    Are you an Aus citizen/permanent resident? You might be eligible for the above. Minimum 5% deposit.

    I was looking at the QLD version of this a few years ago before I bought my apartment. Ended up going with a bank but have always wondered if it's a good deal. Anyone have any experience with them?

  • Maxdax on 13/05/2020 - 19:15

    Hopefully, you get your Citizenship soon and then you can buy a place with 5% deposit and no lenders insurance, have you seen the new government Scheme below - First home loan deposit scheme?

    https://www.nhfic.gov.au/what-we-do/fhlds/eligibility/

  • SuperMid on 13/05/2020 - 19:39

    A $250k apartment would be roughly the same size as harry potters room under the stairs. Enjoy that.

  • [Deactivated] on 13/05/2020 - 20:20

    Single by the sound of it, in Melbourne, so probably paying excessive rent. Own business but moving frequently indicates the business is either online, or you're paying rent on a commercial property too.

    • Leave Melbourne to get cheaper rent, cheaper property.
    • Caravan park.
    • Go halves (with legal paperwork in place) with someone else with the goal of paying the loan down FAST. If not in the same home, maybe a property with a main residence and granny flat. Track the repayments so if you pay a 60% of the loan off and they pay 40%, when it's time to sell they get 40% of the profit and you get 60%.
    • Consider buying a mobile home or building one. If you fit out the back of a truck you could make it a 'stealth' home, park in a different location every night (and don't make it obvious to others you're living inside). Save big $$$ much faster. Or park it at the business premises if you're paying rent there.
    • Move the business address to one you can also live in. (Or park previous point at.)
    • Buy a property you CAN afford out of the city. Maybe FAR from the city. Rent it out, claim tax benefits like depreciation. But aim to buy property where the rent is greater than the minimum loan repayments. Use the difference to pay it off faster, or to pay YOUR city rent. You could also try to get an interest-only loan which means lower repayments, but doesn't pay the principle off, but then use any extra rent for… whatever, while you wait for the property to appreciate in value. Sell it at some point and buy yourself a home, or refinance it at the new value and leverage its extra value to buy a second property you also rent out, and a third, and so on until you don't need to work - just collect rent and do whatever you like. Or with the experience you now have, at some point buy your own home and use that to get a loan to buy more property: cheaper homes, not in the city, and collect multiple rent streams.

    I can't understand buying units. You have to pay strata fees for the 'privilege' of dealing with difficult people or just other people's problems. You can't change a light fitting or paint without permission from everyone else in the same building. You have to put up with their music or their hatred if you complain about it, or smokers who buy the one below/above you, or just the general whining/nitpicking of other people.

    • netjock on 13/05/2020 - 21:22

      You can't change a light fitting or paint without permission from everyone else in the same building.

      Within your own apartment it is okay.

      You have to put up with their music or their hatred if you complain about it, or smokers who buy the one below/above you, or just the general whining/nitpicking of other people.

      I was sandwiched between one guy who was bass deaf. On the other side a girl who was abusing her boyfriend yet the boyfriend complained about us laughing one night.

      Repainted the apartment and people were running to the building manager asking about the smell but the over powering regular smell of their oily home cooked cuisine was okay to inflict on others.

      You need to definitely check the occupants of certain buildings. $200k ish apartments in buildings in Melbourne are not somewhere you want to live medium to long term.

      • Gifwonder on 14/05/2020 - 13:48

        was in a unilodge. problem wasnt the noise, or the cooking food smells, was the weed smell LOLOL

        • netjock on 14/05/2020 - 15:36

          I wasn't in a uni lodge but I am sure same 5h!+ different smell in certain demographically targeted budget ranges.

  • amsaini15 on 13/05/2020 - 21:49

    Prices are not going anywhere for atleast another 6 to 9 months (until unemployment rate is higher). May be re-assess your situation then and proceed. Until then, save harder.

  • Black Brown Blue on 13/05/2020 - 22:11

    Banks have announced properties will reduce by 20-30% - how true this is we will find out in the next 3-12 months.
    Buy a land or built house on land over an apartment if you can. Advantage is more privacy and bigger place.
    Save in all of your expenses.
    Get the smallest loan possible.

  • jleang on 13/05/2020 - 22:25

    I am in similar position, thinking of buying.

    can answer your question, but here is what ive figured out over last few months

    Not sure why everyone thinks it'll be hard to get 95% lvr loan. I thought that was the whole point of the first home loan deposit scheme.
    https://www.nhfic.gov.au/what-we-do/fhlds/

    im reading a lot that there'll be a drop of up to 30% over the next few years. who knows.

    get pre-approval to get an idea how much you can borrow. theyll ask you sht about your expenses and calculate from that. just nice to get an idea how much you can borrow and mentally prepares you for the next step. or at least use it as something to compare to later

    be realistic with your expenses. the bank can do different expense what-if scenarios for you. when you actually apply for loan, have your last 3 months reflect those expenses

  • Killerbala on 14/05/2020 - 01:02

    Don’t get me wrong but anyone with a right mind planning to buy now, needs their head checked

    • Trying2SaveABuck on 14/05/2020 - 08:28

      Why? would you say that the market is falling it is a good time to buy? it is a buyers market which doesnt happen often…?

      • capslock on 14/05/2020 - 08:32
        +1

        Despite predictions of a property crash, the official data shows that prices still went up in April. It just shows that nobody knows anything. It will be interesting to see what the data shows at the end of May.

        • Killerbala on 14/05/2020 - 16:47

          Official data is in itself is a whole lot of rot but the prices are being propped up by fake news and govts are throwing everything at it. Have you heard that govt are planning to buy apartments to help the developers ? Can someone tell me why do you think the property market will raise ? My prediction is that we will not see 2017 peaks ever in our lifetime.

      • Killerbala on 14/05/2020 - 16:41

        Don’t try to catch a falling knife. While few might catch it by the handle many who bought in the last 3 years and buying this year will be hurt pretty bad.

  • Trying2SaveABuck on 14/05/2020 - 08:32

    My advice is depends on your personal preference generally properties with land increase in value faster then apartments

    So i'd probably probably save a bit more and try get a small house or townhouse.

    However if you like low maintenance and are sick of giving you landlord money i'd recommend jump on the market asap - because rent money is dead money and loan interest rates are at all time lows.

    The market is looking more and more like a buyers market when this all ends the market will FLY up imo

  • Hangryuman on 14/05/2020 - 09:27
    +2

    'I am looking at getting into an apartment under 250000 with 5% deposit and LMI. I have been renting for about 9 years now. I am an immigrant so don't really have the option for a guarantor.

    The questions is, is it worth getting into an apartment or should I keep saving for another year and maybe get a place about 40-45 minutes drive west of Melbourne CBD with it's own little piece of land?

    I just really want a place for myself. I am sick of moving every year and paying rent.'

    as an ex-Melbourne real estate salesperson I don't see key information like

    where do you work for commuting - or are you completely able to WFH so can live anywhere ?

    where would you like to live - cbd, suburbs, beachside, hills, forest, lakes ?

    what size place would you like - $250K sounds like starter studio or CBD micro-unit ?

    how many bedrooms - do you expect to grow as a family, or just a singleton pied a terre ?

    do you want to live there long time, or treat it as an investment to lock and leave later ?

    more land may give more capital growth, but can be a PITA mowing lawns and maintaining gardens, fences, fixing roofs and repainting free-standing houses.

    strata units are likely to fall in value more than houses with airbnb and short-term-letting currently dead in the water, but in CBD can be fun inner city buzz in places like Fitzroy or Prahran. And can be maintained as an investment after you've moved out and on elsewhere.

    we exchange money for time - you can have more land further out, in exchange for lower rents and more time travelling to the CBD - or you can have more time inner city walking distance to city buzz and no need to keep a car.

    Small inner $hitty ex-airbnb student rental boxes near universities may be going cheap in COVID times - there should be bargains now - especially under 50sq.m. - but banks didn't like to lend on too-small

    So - start with what you feel you like, then explore an area.

    If you just want to spend your money quickly - 'a fool and their money are soon parted' - so consider wisely and well, then when opportunity arises, act with alacrity !

    In other words, when you've looked around enough to know values in the area you're looking (revisit different days/times - one place I nearly bought on a weekend, I came back during a weekday and it stunk of acetone as it had a fibreglass factory over the back fence - eek !) then be quick to make a firm offer and sign on what you want when it appears, as best places tend go the same day they're listed.

  • catbug on 14/05/2020 - 14:14

    Which state are you living in? In some states, the government will has a shared equity scheme, where they cover 25% of the house price so you only need a mortgage for the 75%. There is no LMI costs :-)

    So this means you could get a property for $330,000 and get a mortgage for $250,000 and only need to put in a 5% deposit. Here's a link to the Victorian scheme https://www.vic.gov.au/homesvic-shared-equity-initiative.

    If you're not already contributing money into super for FHSS you should look into it, could be very worthwhile for you. Good luck

  • Cul8r on 14/05/2020 - 17:52

    Often people wait until they have more money but in the time it takes to get a further xk, the market goes up x+yk, you end up further behind.

    My first property was a unit because it was all I could afford when I was younger. It enabled me to purchase my next place which has also enabled me to purchase the one after that. Making money in capital is great in the property process.

    I do not regret purchasing my first unit, but I do regret not getting something with actual land because the growth was not as substantial as the 2nd property. Also, body corporate was an added cost that became frustrating, but also introduced limitations to when I wanted to do improvements.

    Id personally be weary on appartments…not saying it’s not the right option for you though. Definitely do your homework on the costs such as body Corp and any sinking funds that might exist for items like pools, renovations, lift wells etc. the nice apartment complexes have costs that the residents/owners need to support.

    You need to balance sound financial advise provided by experts with what is important to you and your family.

  • Koala Bear on 14/05/2020 - 19:41

    I would probably hold off for a few years as the macro fundamentals for continued house price growth is very negative. Only probable cause for house prices to appreciate nominally over the next 5 years is if we started witnessing inflation in a serious manner.

  • Drakesy on 14/05/2020 - 21:19

    Record housing mortgage stress levels, low to next to no immigration, 10% unemployment which is possibly more except for job keeper, an economy running on services with nor real value adding manufacturing industry.
    The only thing housing has going for it is it's a physical entity unlike stocks etc.

    Personally I wouldn't touch it with a ten foot pole atm. With more downsides than upsides. Yes a drop is completely possible when the fomo wears off and foreign buyers dry up. Wa has already decreased by 20+% from peak and it's quite possible to fall further.

  • Aneurism on 14/05/2020 - 22:24

    "I am looking at getting into an apartment under 250000 with 5% deposit and LMI."

    Basically if the apartment is less than 50 sqm, it's going to be a problem.

  • annyfication on 15/05/2020 - 09:56

    Personally, I wouldn't buy a property without at least a 20% deposit, and then extra money on the side for legal, stamp duty, and furnishings. I also saved up a year's worth of mortgage in case I lost my job.

    Yes, I got roomies, didn't spend for 3 years, asked parents for money, etc etc. I don't even own half of the apartment yet, but at least I won't be struggling if I lost my job.

  • Shamdog on 15/05/2020 - 13:02
    +1

    I don't think there is ever a 'perfect' time to buy and if you're tossing up between an apartment and a house, it really comes down to what you prefer, lifestyle choices etc. Given all of this recent doom and gloom about plunging property prices (which I personally don't think will eventuate), it might be fiscally prudent to save more and buy a house. Land will always appreciate more than an apartment but if you ever look to make the apartment you buy an investment, it might generate a better return depending on prevailing rents in the suburb you have chosen to buy in.

    If you are going down the path of LMI, I would suggest saving the amount of LMI payable and actually pay this amount up-front to the bank. LMI is a sunk cost and does nothing to benefit you. Think of it as an insurance premium the bank needs to pay to cover themselves in the event you default on your loan. By paying the LMI up front, it is not capitalised to your loan and thus, you won't be paying interest on this amount over the next 30 years.

    Either way, getting your foot into the property market is a good move regardless.

    • axloz on 15/05/2020 - 15:09

      Some very sound advice here.

      The property market is so over-speculated and scrutinized.. The simple fact is that city based property is desirable and it will therefore create a pricing bubble - big/small/otherwise.

      My layman perspective for Sydney is that the best time to get into the market and buy is when you're financially ready to do so and your lifestyle suits - forget about what the market is doing at that moment. Just make a decision for yourself on whether you can settle into a place for at least 5 years and then check this against your savings and loan calcs. Aim for 10% deposit. The more you have up front the better.

      If there is some magical big slump in the market all that will change is that you may need to stay there longer for the equity to grow before its viable for you to pull out of the market and sell, or up/side-grade to somewhere else. Presuming you can still meet the payments etc etc..

      At the end of the day if you're not paying down your mortgage, you're paying rent..

  • gezza90 on 15/05/2020 - 19:48
    +1

    I don't think there will be a property crash but more so a dip in prices. This is because of unemployment, banks more stringent on lending and rejecting many applications, more demand for cash but less going around which would make it harder for someone to sell their property. Demand is still there but with empty hands. For example, someone I know (75yrs old) recently purchased a 6YR old low strata 3br unit in Parramatta NSW of what is normally worth $720-$770k, bought it for $620k because there were no buyers and he was cashed up. He paid upfront without mortgage.

  • tik tok on 15/05/2020 - 20:35

    The guy drives an audi and has a working partner - does a job in fintech- does a business - can afford to go to uni and can only commit to 5% of $250k? Am leaning towards a troll post.

    • [Deactivated] on 16/05/2020 - 12:29

      What makes you think that's him?

  • [Deactivated] on 16/05/2020 - 12:30

    If we were to go into another lockdown , would you be able to live in an apartment without going stir-crazy?

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