Noob house buyer

[Flyboy]

Been doing a lot of reading on the other threads about this sort of stuff, but I'm still very VERY noobish about buying property/houses etc.

Green title, strata, fixed interest, variable interest and more.......these are all foreign concepts to me. Its all rather confusing jumping into it all.

I've just starting to look at buying an entry level house and land package (read smallish house on an average block). something I can pay off and then use as a stepping stone into something bigger and nicer when the time is right.

What sort of deposits and repayments am I looking at for a home loan (of say around $360,000 with around $20,000 deposit cash available)? Do I go variable or fixed interest? Government rebates and grants available?

Can someone please explain how this crazy messed up process works? Please keep it simple for the simple minded person here......me (well as simple as you can).

[=Stevo=]

I'm by no means an expert, in fact I'm generally wrong...

but if I were you, I would be looking to buy something older as CLOSE to the city and major facilities (shops, schools, parks, public transport) as possible...

Those house and land packages are generally WAY out in the sticks, heaps of them are strata-based as well, not green title... and you will most likely find that they don't increase in value anywhere near as much as an equivalently priced established property closer to the city...

[Sprint]

Buy a 2 to 3 bedroom unit in Doubleview, Yokine, Maylands or similar and then buy again as soon as practicable.
Let one out, rinse and repeat.
You''l buy that nice house outright and have a few toys in the garage as well...

If you really want to get ahead - get an investment advisor you can trust and go that way.

S.

[Anneliese]

So many things to consider.

We built. Is my second house. His first.

We built with homebuyers. They have been great. We found the area we liked which is not in whoop whoop. Brighton estate. Google it. They have a range of blocks big and small. As well as houses on display there.

Homebuyers organised the holding of the block and our finance for both. It was so much easier.

With the freeway extension and train line going north we think it is a great spot. Front and rear landscaping and fencing was included. Our package came to $370k but that was on a bigger block 3 x 2 with study and theatre.

I think you need to work out wether you want to build or buy established.
We looked at established but found it hard to get what we wanted.

Good luck

[dr00]

Been doing a lot of reading on the other threads about this sort of stuff, but I'm still very VERY noobish about buying property/houses etc.

Green title, strata, fixed interest, variable interest and more.......these are all foreign concepts to me. Its all rather confusing jumping into it all.

I've just starting to look at buying an entry level house and land package (read smallish house on an average block). something I can pay off and then use as a stepping stone into something bigger and nicer when the time is right.

What sort of deposits and repayments am I looking at for a home loan (of say around $360,000 with around $20,000 deposit cash available)? Do I go variable or fixed interest? Government rebates and grants available?

Can someone please explain how this crazy messed up process works? Please keep it simple for the simple minded person here......me (well as simple as you can).

green title means separate piece of land that is yours and yours alone. strata means a piece of land that is split up into two or more pieces of land that are owned by other people. sometimes strata blocks will have shared space (such as driveway, garden beds etc) that must be maintained so that stuff is split between the owners. also often the home insurance is shared between the owners.

fixed and variable is just that, fixed interest you lock in a rate and you know your repayments for the entire life of the loan. if you want to alter it or pay it off early you have to pay (usually quite large) break fees. variable you have no idea how much interest you will be paying in 10 years because the interest rate could be 7% or 17%. obviously banks arent dumb, they know more about interest rates than you do. you pay more for fixed interest loans the longer you fix them for and the more likely rates are to move up the more expensive they will be compared to variable. you dont realy have to worry about any of that though because you cant get 30 year fixed loans in australia. the longest you can get is 10 years which i dont think you would be able to afford.

if i were you i would steer clear of new builds for a first property, especially way out in the sticks. think about it this way, you are paying $350k. say $150k of that is for the house leaving $200k for the land. the house portion will depreciate virtually like a car or bike because who is going to pay anywhere near $150k for a used house on a block that they could easily build brand new for the same price. if you buy a 20 year old house for $350k then you are paying a lot less for the house (the depreciating portion) and a lot more for the land (the potentially appreciating portion). i also think you will find that inner suburbs will have a much more stable value than out in the sticks. lots of reasons, older people live in inner suburbs and are less likely to be forced/desperate to sell etc.

use a simple calculator off the net to work out repayments (ANZ Home Loans - Calculate My Repayments) and then once you have a rough idea of what you think you can afford go and see a mortgage broker to work out what the banks will lend you and what the government will fork out from their coffers of stolen money. probably a good idea ot work on an interest rate if 9% to account for interest rate rises and obviously a loan term of 30 years. so youre looking at about $2900 a month for a $360k loan.

there is also a thing called lenders mortgage insurance. if your deposit makes up less than 80% of the purchase price of the property then you have to pay for the banks insurance against you not paying up. if you only have $20k (which is only around 5%) then you will have to fork out about $8k i think for LMI based on that loan of $360k. but your mortgage broker will go throuhg all that.

[RT]

what dr00 said, also, i'm fairly sure you can use the first home buyers grant as part of you deposit, so that take you up to $34k. also it been a while but i thought loan insurance was around the $1500 mark......maybe its gone up since the crisis?

[peter600]

when you work out finance, pay a theoretical ten percent interest....

if you can afford that, maybe jump in.
If you can't , find a cheaper property.

[Stephan]

Give Ben Keevers at the homebuyers centre in Balcatta a call. He doesn`t pull the wool over your eyes and gives you a straight answer without pressuring anybody.

0404 056 010

[stromrider]

Government grants at the moment are $14000 for an established house and $21000 for new construction. Valid until 31st October (or maybe longer.....depends on politics and economics )

After that, it was proposed to go back to 10500 and 17500 respectively.

There's some good places out there, but a lot of crap too.

[Flyboy]

when you work out finance, pay a theoretical ten percent interest....

if you can afford that, maybe jump in.
If you can't , find a cheaper property.

Is this to account for the inevitable rise in interest rates thats going to occur? I'm a noob at economics too.......:mellow:

[dr00]

Is this to account for the inevitable rise in interest rates thats going to occur? I'm a noob at economics too.......:mellow:

yeah, people generally say add 2% to the current rate. but we're also at a historically low rate at the moment. theres only one direction it can really go...

[WIGARUS]

I think that the second and third posts are very good advice. There are thousands of house and land package type deals that are on the very ends of the freeways that will always appreciate slower than the places closer to the city.

Also, I can't help thinking that there are a lot of people that bought these houses in mortgage belt areas that can only just afford to, so when interest rates start rising again there will be a lot of people that are looking to sell these properties.

A place closer to the city will be easier to sell if you need to and easier to rent out.

[andy_b]

yea always look at the interest rates higher than they are now... can u afford it if it goes bak to the way it was say a year or so before we had the crash... around 2005 when we gonig through our boom period... im doing property at curtin and in prop economics last sem we had a class discussion and most ppl thought that yea the market is going to come bak up and interest rates rise and all these first home buyers who are pressured into buying are going to come into the shit... when there repayments rise substantially and they cant afford it so always think if the interest rates rise are u still going to be able to afford paying it of???

[Xuaxace]

Bit messy, but you get the idea of the interest rates... it can only go up from here.



Australian Reserve Bank

Effective Date Change in cash rate
(Per cent) New cash rate target
(Per cent)
8 Apr 2009 -0.25 3.00
4 Feb 2009 -1.00 3.25
3 Dec 2008 -1.00 4.25
5 Nov 2008 -0.75 5.25
8 Oct 2008 -1.00 6.00
3 Sep 2008 -0.25 7.00
5 Mar 2008 +0.25 7.25
6 Feb 2008 +0.25 7.00
7 Nov 2007 +0.25 6.75
8 Aug 2007 +0.25 6.50
8 Nov 2006 +0.25 6.25
2 Aug 2006 +0.25 6.00
3 May 2006 +0.25 5.75
2 Mar 2005 +0.25 5.50
3 Dec 2003 +0.25 5.25
5 Nov 2003 +0.25 5.00
5 June 2002 +0.25 4.75
8 May 2002 +0.25 4.50
5 Dec 2001 -0.25 4.25
3 Oct 2001 -0.25 4.50
5 Sep 2001 -0.25 4.75
4 Apr 2001 -0.50 5.00
7 Mar 2001 -0.25 5.50
7 Feb 2001 -0.50 5.75
2 Aug 2000 +0.25 6.25
3 May 2000 +0.25 6.00
5 Apr 2000 +0.25 5.75
2 Feb 2000 +0.50 5.50
3 Nov 1999 +0.25 5.00
2 Dec 1998 -0.25 4.75
30 Jul 1997 -0.50 5.00
23 May 1997 -0.50 5.50
11 Dec 1996 -0.50 6.00
6 Nov 1996 -0.50 6.50
31 Jul 1996 -0.50 7.00
14 Dec 1994 +1.00 7.50
24 Oct 1994 +1.00 6.50
17 Aug 1994 +0.75 5.50
30 Jul 1993 -0.50 4.75
23 Mar 1993 -0.50 5.25
8 Jul 1992 -0.75 5.75
6 May 1992 -1.00 6.50
8 Jan 1992 -1.00 7.50
6 Nov 1991 -1.00 8.50
3 Sep 1991 -1.00 9.50
16 May 1991 -1.00 10.50
4 Apr 1991 -0.50 11.50
18 Dec 1990 -1.00 12.00
15 Oct 1990 -1.00 13.00
2 Aug 1990 -1.00 14.00
4 Apr 1990 -1.00 to -1.50 15.00 to 15.50
15 Feb 1990 -0.50 16.50 to 17.00
23 Jan 1990 -0.50 to -1.00 17.00 to 17.50

[Brougham]

We found the area we liked which is not in whoop whoop. Brighton estate. Google it.

sorry, but that IS whoop whoop!