I earn $150K and my wife $40K (part -time) a year. We were thinking to buy a house, applied for a loan and got approved for $900k only. Is that what normally people get approval for with that income or should I shop around?
Just wondering how people purchase houses for $1.5 mil or above. They must be very rich or earning $300K+ (together) a year to buy anything for $1.5 mil or so?
Very sad at the moment.
There are 766 houses and 367 townhouses listed for sale in the Sydney Region under $900K.
Many more in the other capital cities.!
I dont see a problem
But yes exactly as you said….
If it is your first house, you probably won’t be able to afford $1.5m.
There are 766 houses and 367 townhouses listed for sale in the Sydney Region under $900K.
The majority of those houses are probably duplexes, or they are falsely listed as houses despite being a townhouse or unit.
For the rest of them, the price (or price range) is just a guideline, and they will probably sell over that. A lot of them don't have a specific price, but they fall under the price range you searched for because the agent put the range in there to attract more buyers.
And, finally, the ones that are actually houses and under $900k are probably mostly duds, i.e. there is something majorly wrong with them, like being located at a busy intersection where you can enjoy the roar of car engines and the smell of petrol fumes all day, improving your lung health.
Or they require half a $ million worth of renovation to be comfortable and/or liveable for the next few decades.
Yes check the "Sold" price. It will probably be over $900k.
Also if you buy a 50 year old crumbling house/unit in Sydney under $900k, you probably need to spend $300k over next 10 years just to make it habitable or it might even need to be demolished and rebuilt.
@techno2000: I hate having to defend this, because I 100% agree property prices are absurd, but consider the OP could borrow $900k, so they must have some deposit as well.
And there are many units available in Sydney that are fine for less than $900k, and stats this week from domain say the average unit price is below $900k everywhere except the eastern suburbs and north:
https://www.domain.com.au/news/its-very-disheartening-sydney…
It sucks to have to pay such prices, but it isn't true people can't buy a home with nearly a million dollars, just not the ones they wish for.
Edit: added north as I didn't see the whole table on my phone.
Shop around with mortgage brokers.
But just keep in mind your repayment, just because you get approved for more, can you actually afford the repayment.
Some people already own a house and sell it and use equity plus their income to buy in Sydney at $1.5m. So don't compare.
Have you considered first home buyer grants.
Do you want a house? If so you have to look on the outskirts of sydney
If you flexible on townhouse or apartment? you have more options
Is it possible for both partners to work full time?
Spend both of your entire lives slaving and saving to buy the $1.5 million cardboard house.
This is the way
And you'll need it if you want your kids to have a chance to buy a house of their own after you die. Or half a house of their own if you have two kids.
Leaving your house to your children is no longer a thing. Higher powers require you to reverse-mortgage your primary place of residence if you want to be able to afford aged care.
I'd rather live in an apartment and enjoy life.
The alternative is to spend your entire life slaving away to pay for someone elses mortgage.
you can shop around but you wont magically be able to borrow 600k more even if you shop around…
Just wondering how people purchase houses for 1.5 mil or above. They must be very rich or earning 300K+ (together ) a year to buy anything for 1.5 mil or so?!
Inheritance (If you have ever been to an auction, you notice when 20yo couple easily outbids you)
That's about right for your household income. People are affording $1m+ houses by starting smaller (e.g. an apartment or starter house further away from CBD), building up capital over the best part of a decade, and then upgrading.
Also you're mostly competing against households with 2 full time incomes. A semi-stay at home partner is a luxury these days.
There's a new financial institution being tapped by thousands of Sydneysiders: The Bank of Mum and Dad.
BMD has enjoyed considerable asset growth over the last few decades and may be able to tap some of that to help the kids. Only problem is BMD sometimes lacks money itself, or simply doesn't exist.
The other alternatives are: earn more, buy something further from the CBD, save a larger deposit, cut expenses and any hope of having children for the next 10 years while you save everything possible.
Hi OP, its smaller because the rates are high right now, if it was a lot lower you'd probably be able to borrow a lot more. But Guess What :O The prices will also go up by that much.
Also most have something to supplement it, like a parent/another home/deposit etc to make that $200K to $400K extra.
I earn 150K and my wife 40K (part -time) a year. we were thinking to buy a house, applied for a loan and got approved for 900k only.
How much deposit do you have and where do you want to purchase?
Once upon a time people started off with a starter home. This was a smaller house, maybe a townhouse or apartment or needed fixing up, in an outer suburb. Now it seems like everyone wants to jump straight into a forever home.
forever home.
Yea and forget things like
The jobs they have aint forever.
The neighbours next door are from hell
The partner runs off (or they do the same)
Grey Subway tiles arent the vogue
A kid comes along and the local school sucks
They would have a massive deposit from making their own smashed avocado on toast at home using avocados always bought on special.
Pachinko
Step 1 - Be rich
Step 2 - Buy house
Step 3 - ???
Step 4 - Profit
In this new banking age, most places won't lend much more than 5x total combined income, especially if first home loan …
lol 900k loan,f**k that
Go back in time 30 years
Do you have a deposit? Having 10% to 20% deposit makes repayments much easier. Don't buy beyond your comfort limit (i.e. what repayments you can comfortably make regardless of how much the bank lends you). $900K is a lot of money to repay.
Consider smaller units / townhouses - maybe further from city.
shop around with mortgage brokers.
Only people buying in Sydney are those with an onlyfans page.
There's plenty of houses for under 1mil past Blacktown
Typical - everyone these days wants to start towards the top of the property ladder.
How about lowering expectation and build you way up?
ps - that's the way the older generation did it.
The way the older generations did it was to start off… with a mortgage… for a house.
…for a house …. that cost three times the annual income ….. of the sole income earner.
I’m 100% on board with the ridiculous prices, but back when houses were cheap the average place was 3 times average income.
If you wanted an above average place you still needed to pay above average prices, and young people buying their first property would usually earn under the average income, so correspondingly bought cheaper houses.
A big change has been the size of our cities. A starter home in 1970 might have been at Revesby or North Parramatta, now they are obviously 5 times as distant.
What the bottom or middle of the ladder looks like is quite different these days. My parents bought their starter home as 3bdr house on a quarter acre in the 70s. With similar jobs you couldn’t do the same now. Realistically what is a modest home now vs then are very different. A modest home is now a unit or townhouse.
But expectations have to be quite low given the income to house price ratio change
https://www.datawrapper.de/_/1IvLJ/
Sydney is genuinely difficult are wages aren’t that much higher than the rest of the country, but houses are.
Your credit cards probably killed your chances. You need to drop your CC limit to say $3K when you apply and then after approval request and increase if the bank will allow it.
I would suggest you ask the bank what things caused the prelim approval for $900K.
Watch the wording as they do not give you full approval for a loan before you buy a place as they may reject the loan if the place does not meet the banks valuation.
1.5mil+ in general will not have 1 income as part time - the household income will b made up of 2x professional full time workers.
Note - always exceptions for those on somewhat decent single income $250k+
You should try to save a larger deposit as quickly as possible. More Australians are choosing partners mainly based on their income these days.
What's your expenses? If you're earning 10k a month and spending 9k then the bank won't lend you much.
Yes, you are correct. You have to be quite rich to purchase a $1.5m home as your first residence.
I paid $1.5m for my current place in 2018 but the journey looked like this:
NB: All my places I value added using (mainly) my own labour).
Kogarah: 1 bedroom apartment on a main road under the flighpath: Bought 1981 $30k (borrowed $15k. I have no idea how we managed to save that deposit, it was about 14 months pay ). Sold AT A LOSS 1984 $28k. Replaced the kitchen benchtop, carpeted, painted and other minor stuff.
Rented a while.
Kogarah: 2 bedroom, 1 bathroom, 1 garage, weatherboard house with an easement over 1/3 the property. Bought 1986 $100k (borrowed $60k). Sold 1991 $175k. Reskinned & painted the whole exterior. Fitted a slow combustion stove because the place was a fridge in winter. Replaced floor coverings and other minor stuff.
Had a border in the 2nd room.
Rented a while.
Glebe Point: 3 Bedroom, 1 bathroom, 1 garage, double brick single story end terrace. Bought 1992 $285k (borrowed $80k), Sold 1998 $468k. New kitchen & bathroom and opened the back up to the courtyard with bifolds.
Blakehurst: 3 bedroom, 3 bathroom, 1 garage double brick house. Bought 1998 $582k (borrowed $110k). Sold 2017 $1.75m. No major work but lots of repairs, painting and maintenance to what turned out to be a poorly done flip.
Rented a while
Erskineville: 3 bedroom, 2 bathroom, 2 car space townhouse. Bought 2018 $1.5m (no borrowings). Still there. Have since spent ~$235k on converting an unusable store room into a 4th bedroom, replacing both bathrooms & a kitchen, paint, carpet, Solar PV and 26kW of batteries. It's worth $2m so not a great investment in terms of opportunity cost but it's a great home.
That's 40 years of solid work and learning how to renovate and paying loans off as fast as possible. Lots of sacrifices made in the early years. I wouldn't like to be trying to get a start today
Two posts and two comments in six years. One comment to his house painting post.
They must be very rich or earning $300K+ (together)…
First step is some chemistry knowledge. Second step is the purchase of an RV
You don't!!
People have the wrong assumption that buying a house is investment.
Sure, its price might increase as it might go down.
You don't know if 10y down the road changes to the suburb will drop the house prices meaning you lost money.
Nobody mentions that.
900K is only to buy the house, it does not include maintenance costs, fees and all when owning a house plus depreciation.
"I earn $150K and my wife $40K (part -time) a year. We were thinking to buy a house, applied for a loan and got approved for $900k only"
My earning is higher than you both but I would never buy a house here.
I have watched enough house inspection with "brand new houses" beyond disaster with repairs costing 6 figures.
How many years is the 900k loan for??
20 years??
30 years??
Spend those decades saving, investing the money while renting a place.
I rent too, I get it is annoying those mandatory inspections but if something breaks, the building fix it, zero cost to me.
If something breaks in your house, you either fix it yourself or pay for somebody to do it for you.
Everything comes from your pocket.
I never see buying house talks mentioning the extra costs, you will never spend only 1.5M, that is just the start.
Find out all the fees you have to pay excluding hidden maintenance, those 1.5M will become close to 2M assuming nothing will happen, assuming no more economy crashing, no more interest rate drama.
Never max out your full borrowing capacity for your first house! My partner and I earn roughly 400K per year, we were approved for over 2 mil, we settled on a $750K townhouse 10Ks from the CBD and can comfortably pay this off, in 2 years we have already paid off 30% of the house. In another 2 years we will own more then 50% of the house then rent our townhouse out and buy a house.
Be smart with your first purchase
To start with, I'm not offering commentary on the wisdom of a debt:income ratio any higher than what your bank is offering you.
Secondly I'm assuming there are no plans for children in the foreseeable future, or that you have savings / parents etc to assist with repayments during any parental leave.
Having said that - banks assess your ability to repay at a rate 3% higher than the prevailing rate. Usually the rate used is the bank's standard variable, so if you can find a bank with a lower standard offering, you may be able to increase your borrowing. Also some banks won't apply the 3% buffer to a fixed rate loan of three or more years' duration, so that could be another avenue to explore.
And get rid of any other debt eg credit cards, personal loans, novated leases as all of these will affect your borrowing power as well.
All the same, a $900k loan would slot you into something worth $1.125m which would be a step on the ladder.
Not sure you'll even see this, as it looks like you've posted and ghosted.
$900k at 6% interest over 30 years is $65k a year. That's probably a little under half your take home income.
Stop worrying about keeping up with the Joneses and think about what you need. Do you really want to be a stressed mortgage statistic if you're out of work for a few months? I was able to build up a 12 month buffer in the offset within 18 months, if interest rates start coming down I'll be on easy street. All it took was living a little bit further out and I got significant financial security.
That seems about right not knowing how big your deposit is. A large deposit can help demonstrate to the bank your ability to save and service a loan. I’m not sure how old you are and if you have kids (presuming you do if wife is working part time) but say you’ve been working for 5years at that income level, you should have a $300k-500k deposit. It also depends if you have other debts like car loans etc.
You seem to be influenced by the media/banking/realestate narrative that tries to get young Australians to buy a super-expensive house in their 20s to keep prices high, and to keep banks making megaprofits from the billions of $ in interest Australians seem to want to pay them for the majority of their working life.
Try saving up for a decade until you have a decent deposit, then buy an affordable house within your budget, and you will be debt free within 3 years, as opposed to 30. It's a nice weight off your mind to be debt free. And the banks and real-estate agents can go poop themselves.
Also, if you think it's normal to buy a house in Sydney, you are very mistaken. It is one of the top 2 or top 3 most expensive cities in the world to buy a house. My girlfriend and I are successful, full-time workers with decent salaries and a lot of equity, but we could not buy a house in Sydney (except maybe a dilapidated undesirable house on the Western outskirts).
Have you tried inheriting 7+ figures?
Just sell your existing house that has gone up in value and use the proceeds toward a new place.
If it is your first house, you probably won’t be able to afford $1.5m.