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Advice on buying 1st home.....

Discussion in 'The Pub' at netrider.net.au started by bambam_101, Mar 19, 2007.

  1. Hey all,

    Looking at buying my first house. My sister and I want to do a joint loan and get a house closer into the city rather than me buying something out in the sticks on my own.

    My question is this....

    Is it advisable to go through a bank directly? I have heard varying reports about home loan lenders like rams and aussie etc. The rates ive been quoted through rams are on par, if not better then the likes of anz, westpac etc. The catch is, i would prefer to pay a lower deposit and have some spare cash on hand to do some things to the house when i get it. the banks all require at least 5% to get started. Then i gotta make up the shortfall between the fhog and the stamp duty. Im looking at around at places around $400k and 5% of that is $20k as a deposit. Then I would need about another $10k to make up the difference between the fhog and the stamp duty total.

    Rams do a 100% home loan and yes im going to pay more in mortgage insurance but i can handle that as it would not be an upfront cost. I plan to pay extra off the house rather than just the minimum as well as do renovations over time. Ive got lots of contacts in the construction/building industry.

    BAsically, im just after advise on what to look out for or any stories anyone can tell me about various lenders as its quite a nervous time for me. Im told your first home loan is quite daunting but its something you never regret. I just wanna make sure i dont get taken for a ride.

    Cheers guys



    Scott
     
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  2. Scott it is against the law for me to offer you financial advice, but what I did was go to a broker and set out exactly what I wanted. it was his job to then go and find it for me, he doesn't get paid unless he finds what I want. :grin:
     
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  3. I was talking to my sisters bf recently who works in marketing for morgage choice about weather its better to go direct to the bank or to a morgage broker..

    his opinion was to go to 2 or more brokers, tell them exactly what you want and choose the best of the options they give you. It costs you nothing except time as the bank pays them.

    He also said that the banks are not allowed to offer better deals then what morgage choice (and i presume other brokers) offers as they have written agreements stating this..

    good luck with it, im tossing up weather to do this or not in the next couple of months..
     
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  4. Went through the same thing a while back except I was entirely solo. When it comes to particular types of finance, no-one can say "DO THIS" but what we can do is give you some personal experiences to have a think about before making the decision yourself. Given my experience, I will always now avoid banks at all costs. I had no end of trouble with them and they blatantly tried to rip me off. Then they almost defaulted on the sale processing through incompetence so I almost lost the house after 3 months of looking!

    Since, I have refinanced twice for varying reasons and I have gone through mortgage brokers each time. They were brilliant. Unless things have changed they don't cost you a cent as the banks pay a commission to them when you take up a mortgage through them. Each broker should have about 25 "products" to choose from and while they can't specifically recommend one particular product over another for your situation, they can explain how the different types of finance work and what situations do and don't suit those types. They will then point out the pros and cons of each product they offer. Then once you decide, they make it all happen. In other words, they do all the legwork and make life a whole lot easier for you. As happened with my first re-finance, they may even give you access to overseas lenders that you wouldn't have had access to as a walk in the door customer.

    As far as how much to borrow, always have a buffer or emergency money (maybe 3-5%) that is absolutely off-limits until everything is done and dusted. If the house sale is progressing and then your car blows up, DO NOT use your emergency cash - take public transport! I needed it desperately thanks to another bank stuff-up and if I hadn't had it ready to go, I would have been in deep shit. Then, if all goes well you will have a nice little pile of cash to start furnishing/renovating with the day you get the keys. In my case, after shit turned to trumps and my emergency cash was expended at settlement, I was sitting on plastic outdoor chairs and tables for a month. Ah...the memories. I love banks :furious: .
     
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  5. only advice I can give is not to jointly apply for the first home owner's grant if it's the first place for both of you. You should be able to claim it under just one of your names, leaving the other still to use it up later :) don't quote me on it, but it's the advice I was given when my gf and I bought our house.. unfortunately AFTER we bought it ;)
     
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  6. I was going to mention the first home buyers grant, but you beat me to it :p

    I don't know whether you can apply for just one buyer to get the grant when both names will be listed on the mortgage.

    Something you will have to check, and I would go the broker route as well :grin:
     
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  7. It's called a FIRST HOME owners grant for a reason. If you try to buy another house and claim the grant again it is fraud, you will be caught and made to repay the money and then some.
     
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  8. Brokers are good, very good. Mortgage Force is a very good company too.
    My other advice would be don't mortgage yourself to the hilt, assume you'll not be making the same money as you are now, and factor in some play/contingency money when you do a monthly budget to decide how much to borrow.
    Stick to a price range and don't go outside it!

    Regards, Andrew.
     
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  9. yes. and everyone's circumstances and finances behind the scenes are different. The advice was fine for us (even though it was too late) because of the way the loan and actual ownership was set up - it may or may not be suitable to others and I assumed that would be a relatively obvious disclaimer to anyone asking for financial advice on a forum :)
     
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  10. Get first home buyer's grant.

    Mortgage in 1 persons name.

    "Rent" it to your sis [or vice versa], negative gear it, and score whatever tax perks you can.


    ... oh and make sure it has nice bathroom & kitchen - because they are the most expensive, pain in the arse things to have to fix up later.
     
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  12. The reason im going in with my sister is so as we can afford a nicer place in a better area. I cant afford to do it on my own so cant get finance on my own. Well, for that amount anyway. The first home owners grant will have to be split between us due to this circumstance. I dont think you can just put it in one persons name.

    And the bathroom and kitchen thing.......my best mate who will be living with me does them for a living! Can turn an absolute shit hole of a kitchen into a work of art! Same for bathrooms! Alot of his work has been used in Vogue magazine and the likes! When i said i had contacts in the industry in my OP i meant it!! hahaha. Fortunately, due to my line of work, i know alot of people that can assist me in doing good quality renovations for very little outlay. Most jobs will cost me materials and beer!

    Thanks for the advice so far guys. Feel free to keep it coming!
     
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  13. Just buy it any way you can I say. We bought our first house eight years ago. Because I'm self employed all of the banks wasted our time by telling us no problem, then a week later they say can't do it. We nearly missed out on the perfect place ( only $100K back then :roll: )
    Eventually we tried a broker and they came through with the brass. The loan setup and interest rate were shithouse, but at least we had the house and re-financed a couple of years later.
     
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  14. Go broker. Easy as.

    Got a good one who still follows up with us from time to time after 2 years to see how we are going (prolly helps him to drum up more business, but we don't mind a bit).
     
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  15. I used Rams when I bought a house a couple of years back and found them fantastic.
     
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  16. Not too baaaaaad eh! :roll:

    Regards, Andrew.
     
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  17. He gets an annual commission off your outstanding debt so it's good to stay nice to the people who are paying your wages! :cool:
     
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  18. From my experience, I would definitely be going to at least two brokers and seeing what they come up with.
    If I ever do it again I will DEFINITELY be avoiding the BIG 4 banks. There are lots of other options out there, and plenty of them are better than what you would get from the big 4. A few are dodgy, though.
    Pay particular attention to fees and charges, interest rates that vary depending on how frequently you make payments, early payout fees, fees for redraw etc. You need a complete picture of exactly how the fees stack up before you sign anything.
    Be wary of the lender's policies on how they go about approving the loan. Many of them will not give final approval until AFTER you have paid the deposit! Meaning they can hang you out to dry if they decide the property is not worth what you paid. This is NOT the same as getting approval for a specific amount of money. Try to get something in writing from them that says they approve the loan on THAT property up to a particular amount. Quite often they will want to send a valuer around to check it out, which you will have to organise with them. You don't actually have to do this, but I know at least one person who lost their deposit forever when the bank reneged on the deal. (It's pretty rare, though).
    Go to lots of auctions WELL BEFORE you are ready to buy, so as to get thoroughly familiar with the process, the tactics and the tricks involved. There is a LOT to know about, if you buy at auction, and it's better to learn it before you are ready to start bidding.
    Say goodbye to your Saturdays for a few months. Good luck!
     
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  19. I totally recommend you get a pre-purchase inspection...that's if it isn't already compulsory with the lender.
     
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  20. Rams are definately in the hot seat at the moment. They seem to have the best deal and options that suit us. So many people, in particular the older generation (like my parents and their friends) are all saying not to go through a broker and you should always go through a bank. Their reasoning behind this is that if you have a loan with a bank directly then if you have any trouble with payments or whatever, they will go out of their way to help you where as a broker couldnt care less. They got their commission and theyre onto the next client. But in comparing rates and fees withthe banks and places like rams, rams are the clear winners.

    Just sat down and spoke to the parents tonight and they agreed to go guarantor on the loan meaning they are using their house as sedcurity for us. Once our loan gets down to 80% LVR then their house is released and were on our own! Looks like we gotta start looking for a place!! Oh, it also means we avoid having to pay mortgage insurance which was going to be about $18k!!!!
     
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