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House / Apartment Buying

Discussion in 'The Pub' at netrider.net.au started by lowercase, Jul 13, 2010.

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  1. House

    13 vote(s)
    92.9%
  2. Apartment

    1 vote(s)
    7.1%
  1. Hello huge amount of information forum,

    I'd love some advice/answers/things to consider...

    In 2 years (ages away I know, but it's probably going to fly by) I'll be buying a house or an apartment. My first one.

    Questions:
    1. Buying a house or apartment - why would you choose one over the other? In terms of living costs, which is more expensive? (I love my space - LOTS OF IT, I love combustion fireplaces and I like nature - trees, potplants, flowers etc).

    2. I'm currently considering Melbourne of Brisbane but if I found the right job or had a career, wouldn't mind living near the coast or on a few acres in a house with no city in sight. (I've always been a rural girl)

    3. I will have roughly $70,000 - $100,000 - on an average wage of $55,000 - $65,000 (or more if I get lucky), what amount of money could I borrow?

    FYI: I will be moving straight into it, but would like 2 or more bedrooms as I'd like the option of renting rooms out to other sexy people.

    4. I eventually want a boxer dog - would an apartment be sufficient if I walked him each morning and arvo? (a little off topic lol sorry)



    5. What other hidden fee's and charges do I have to think about?

    6. If I'm after a house/apartment of $450,000 or less, would I be able to afford it, and what sort of money would I need to borrow etc?


    xx
    hols

    (more questions might come to hand if I think of them....)
     
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  2. I cant give any real answers to u'r questions but there is no way i would mo e ingo an appartment...
    I too love my space, outdoors and plants too much and couldnt think of anything worse then having my next door neighbour only a wall away...
    Personally wen i can afford a house i will be moving to the outer-outer suburbs of brissy so i can have atleast 2-3 acres....
    Not much help i have been but just my opinion...
     
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  3. Jesus hols, you dont half ask a lot do you??. I would not get a medium or bigger dog in an apartment, I think they need the room to roam. Not to mention the mess.
    K
     
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  4. start looking around in area's where you think you might be interested, it will give you a better idea of what is a bargain when it's time to buy....imo sounds like your more a house person then a unit, if you are looking at units, i would consider what services are located near it, as you will find more renter are either singles/couples will look for these places therefore services also sometimes have different idea's on what sorts of services are important too them, so if down the track you are looking to rent it out consider who your client base is, and is the likely to attract those sort of people...

    Other thing to remember is always try and buy worst house in the street (y)

    oh and the renter idea is a top one at that (y)

    Best of luck and keep up informed on how you go
     
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  5. Yeah, bad idea. I've got an 8month old G Shepherd and even with a backyard she's done a fair bit of damage and noise pollution.

    You'd get kicked out of an apartment before your first month's end.
     
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  6. Move to Brisbane area, then I can ride you.... err.... with you
     
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  7. I would go to one of the four major banks and pose your questions to a lender there. They can give you an appraisal of your current situation, an idea of what they would lend you and how to develop a savings plan going forward.
    Since the GFC there seems to be a tendency for them to ask for a larger deposit e.g. > 10%.
    You're probably eligible for the first home owners grant which may be helpful.
     
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  8. 1. One thing you have to remember if you buy an apartment is that you will form part of an Owners Corporation (formerly, body corporate). For anything to be done to the common property or structure (modifications or repairs).. then there's a LOT of extra hassle with meetings and/or ballots for major decisions.
    On that same token, if you buy an older place and end up needing under-pinning or something, that cost is also evenly distributed.

    The Good Lady and myself bought an apartment just over a year ago, but agree that our next purchase will be a fully detached house. This was always planned to be a stepping stone (that we can hopefully keep if all works out) and there are good things and bad things. An apartment will cost you less financially.. but will cost more in freedom.

    2. Melbourne is awesome... if only we weren't constrained by Vic road rules! :p

    3. There's a million online calculators that can tell you how much you can borrow and what level of repayment you can afford... however bear in mind that interest ratess fluctuate, and so can your pay... so don't borrow at your limit right away!!

    4. *shrugs* I know nothing about dogs and their needs...

    5. Once you find the place, and agree to the price, there's
    - Stamp Duty (on the value - calculators available online - it varies per state)
    - Transfer Fees (for the land title - as above)
    - Mortgage 'Application Fee' (avoidable, depending on your loan choice)
    - LMI - Lender's Mortgage Insurance (Compulsory If you borrow more than 80%)

    Remember that even though you might have $100k in cash... your deposit will be much less, because you have to take off the above 4 items then what you have leftover (along with any applicable grants) is your 'deposit'.
     
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  9. Firstly, thanks for the awesome answers!

    Secondly, how much can those 4 points add up to!? :-s
     
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  10. Are you ready for some sober reality?? Based only on what you've stated (meaning there are some other ways to slice the situation) I don't think you're gonna like the answer...


    If you have $100k deposit you're looking at a $350K loan.

    $350K over 25yrs at 8*%pa = $2702/mth repayment or $32424 per year. (*not an unreasonable estimating interest rate.)

    There'll be about $20k in costs/fees/duties (in Victoria) for a house and loan that size as well - which you either take out of the deposit, or add to the loan or lean on a rich relative for. There may be a first home owners grant to offset some of that. Who knows?!


    Can you afford a loan that size? Would a bank loan you that much money?

    On $65k pa, the net income after tax, super and private health will be about $45K. (This will vary depending on deductions etc). Since the yearly mortgage repayment is 2/3 of this net income, I'd say most banks would say no, even with a $100k deposit.

    Now just say a bank did take you on, you'll be left with about $13000 to live off. How do you feel about living on about $1000/mth ($250/wk) for all other expenses?? Insurances, utilities, rates, food, clothes, gifts, maintenance, services, etc. etc.??

    :-k



    Have a play at http://news.infochoice.com.au/calculators.aspx to work out your situation. They have a borrowing power calculator that might put some sober realities into focus... but they also have a locator based on what you can afford... perhaps more sobering reality...
     
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  11. shut it sparky lol
     
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  12. thanks!!! yeah... I definitely think I'm a house person, hey. I kind of forgot / didn't think about the whole "someones bedroom could be adjacent to my bedroom on the other side of the wall..." ewwwww. Couldn't deal with that!!!!!!

    I just kind of assume that everything is sound proofed so I'd never be able to hear them and them me...

    Heh.. 8-[
     
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  13. If I was to buy a house again and had the choice I would buy one located in a court as they are more secure and quieter with no traffic buzzing by outside.
     
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  14. 1. For costs of living, a house is more expensive. They cost more to heat and cool because there is more of it, and you also have water and upkeep of yards etc if you buy a house on a decent size bit of land, ie 500+m. That's just the way the cookie crumbles. Apartments that are managed by a strata can have quite reasonable upkeep fee's right through to the exorbitant end of the scale, but can cost you a bit less on things like council rates, due to the shared nature of these bills. Generally, you will find most of these costs incorporated in the strata fee however, if that is the road you go down. Also be wary of shared water/electricity, and wherever possible, try to find a place where you only pay for what YOU use personally.

    2. Good for you.

    3. What you earn is not the only factor here, you also need to take into account existing debt. Car loan, bike loan, credit card repayments, mobile phone contracts, and any other line of credit. In many cases, using part of your deposit to cancel these debts will allow you to borrow more initially, than keeping a higher deposit but having other debt. So pay these out first, to increase your buying power.

    If you have no other debts, I can give you some basic figures. These come from access I have to an industry worker, but keep in mind they are ballpark figures and this post from me in no way represents financial advice, or anybody employed in this industry (I have to incldue that, they made me promise.)

    So, if you clear all debt, and have a $75000 deposit, on $60k a year, you can expect The following. Using an interest rate nearing the worst end of the market at the moment, of %8 (this helps keep estimations inside your budgets) on a 25 year term, you can expect to borrow around $400k. The better interest rates at about 6.75% see you get up to around 450K. Extend to a 30 year term initially, you can increase your borrow slightly, to around $425k at 8% and $480k at 6.75%. Keep in mind these are variable rates, and can change, but also allow you the flexibility of extra repayments if you can afford them.

    Depending on which bank you chose will determine how much you need for a deposit, and this can vary, You can usually get away with 10%. So if you were to buy a $450k house, you need a 45k deposit, and would only be borrowing the other $405k. The rest of your saved cash you then use for fee's and stamp duties etc, possibly needing to borrow a little more or less, but you get the idea. Also if you borrow more than 80% you need Mortgage insurance. In the above example, you are looking at anywhere between $5-7k depending on provider. Stamp duty is another funny one, Depending on your status as a first home buyer, and which state you are in, NSW for example can be around $16k, or $250 bucks, depending on your circumstances.

    It's a lot of info, I know, But I hope this gives you a bit to work with.

    4. I have a mate who has an indoors boxer. He's happy enough, and as long as they remember to walk him, he doesn't eat... much...

    5. Other fee's charges. Stamp duty, Mortgage insurance, Conveyancing. They are usually about it. Conveyancing covers the legal aspects of transfering the deed from one owner to the other, and they also take care of getting all the final bills and stuff sorted out before handover, so you don't end up paying the last owners council rates, electricity bills etc. Here in Adelaide there is a guy that can do it, fast and well, from as little as $450, I use him every time. I also know people that have paid thousands for the same service by larger businesses. Just remember they don't have to be the world's biggest law firm to do the same job.

    You will want to pay for a building inspection for peace of mind, and definately ask around for this one. You want the guy who all the real estate agents think is a pain in the ass, because it means he is a hard ass and does the job properly, instead of just making a quick buck.

    6. Don't think that you have to borrow right out to your limit the first time around. It is definately hard yakka to own a home with a mortgage borrowed at your highest capacity. You need to consider that your circumstances may change, the market could change, interest rates etc. On the other hand is depending on where you try to buy, this may be the cheapest available. You need to balance what you want with what you can afford. Look for property data about the area you are looking at, to see whether there is current growth or decline, or has it been stable for a longer period of time. If you know people that will be honest with you, find information about development plans, that could potentially increase your property values down the track. There are 2 of those KRudd super schools being built where I am, and our house value has doubled in 4 years.

    The trick is to find it before it goes up though, not after :p

    A quick bit of maths, If you borrow the lot at a high rate/low rate, expect repayments of $650/$600 a week plus.

    $300k sees you down to about 500/450 a week

    $200k down to about $350/300 a week.

    Remember these are just ballpark figures, but they are well within the guidelines, and will hopefully allow you to see how much room you have to move around. You need to consider borrowing an amount that leaves you enough room to be able to compensate for increasing interest rates, and still be comfortable. If you can only just afford the $650 a week now for example, then expect it to realllllly hurt if the rate ever goes up on you.

    Alternatively, you could enter with a fixed rate loan, but these generally have different rates, at the moment slightly higher than the variable, and different rules for repayments etc.

    I'll leave it at that for now, my head hurts. I'm sure there are others here that can also help you out.
     
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  15. clearly i type too slow :)
     
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  16. 1. Buying a house or apartment - why would you choose one over the other? In terms of living costs, which is more expensive? (I love my space - LOTS OF IT, I love combustion fireplaces and I like nature - trees, potplants, flowers etc).

    Apartments generally cost less, but they depreciate more and your chances of a combustion fireplace is pretty close to zero. Houses cost more, the the land value (usually) goes up, so you can sell them for more than you bought them for some time later. Of course, maintenance is also usually more for a house. Biggest factor that would lean me one way or the other is space to park your bike(s). We have two bikes and a car, which we squeeze into a single car space in our apartment building. Not something I'd recommend if you can go for a house or townhouse with a garage.

    2. I'm currently considering Melbourne of Brisbane but if I found the right job or had a career, wouldn't mind living near the coast or on a few acres in a house with no city in sight. (I've always been a rural girl)

    There is a fair amount of greenery pretty close to Melbourne, which makes the house idea more attractive. Inner city Melbourne is deathly expensive, but closer to the fringe you get cheaper prices and more chance of a shrubbery. Brisbane is probably cheaper as far as housing goes, but it has the disadvantage of not being Melbourne.

    3. I will have roughly $70,000 - $100,000 - on an average wage of $55,000 - $65,000 (or more if I get lucky), what amount of money could I borrow?

    See above re mortgage calculators - they are a good way to get an idea of your borrowing power. Also keep in mind that if you have 10% or more as a deposit you might not have to pay the additional mortgage insurance that lower deposit loans can come with. That can save you a few thousand dollars right off the bat. Not to mention the fact that the more money you have as a deposit, the less you borrow, which means the less interest you end up paying over the life of the mortgage.

    Also, the advice about not borrowing the maximum is gold for two reasons. First, if the interest rates go up (and let's face it, over the life of a mortgage they will go up and down a bit) you don't have to panic. More importantly, if you can afford to make extra repayments instead of just the minimum then the extra money goes directly towards paying off the capital rather than just the interest. If you use one of the mortgage calculators (ING and Suncorp have good ones) you'll see that even $50 a week extra can end up saving years and tens of thousands of dollars from your mortgage.

    FYI: I will be moving straight into it, but would like 2 or more bedrooms as I'd like the option of renting rooms out to other sexy people.

    Also an excellent idea - but check rental income and taxes. It can get a bit tricky when you can deduct a certain proportion of your repairs or whatever because you are getting rental income from part of your property.

    4. I eventually want a boxer dog - would an apartment be sufficient if I walked him each morning and arvo? (a little off topic lol sorry)

    No. No dogs in an apartment. Just don't do it. Seriously.

    5. What other hidden fee's and charges do I have to think about?

    Consumer Affairs Victoria has a good site to browse for information about buying a house, including the hidden or unexpected costs. Stamp duty is an obvious one, but there are other things as well. Conveyancing can cost you a bit. I still don't really know what it is that they do, but it seems to be part of the process that is hard to avoid!

    Here is another site with a breakdown of costs.

    6. If I'm after a house/apartment of $450,000 or less, would I be able to afford it, and what sort of money would I need to borrow etc?

    Use a calculator like this one or this one to figure out what different lenders are likely to give you based on your deposit and income.

    Disclaimer: I am not a real estate agent, and I've only bought one property in my life. Any or all of what I've said might be wrong.
     
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  17. Rob's post also makes a very good point too, just because the calculator says you can borrow it, you still need the bank to say yes.
     
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  18. But not as slow as me!
     
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  19. Buy a house and don't touch anything strata-titled with a barge pole unless you are prepared to kill people.
     
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  20. Answers:

    1.) house> land = $mullah$, buidings depreciate in value, land always escalates. however, more land = more maintenance = less riding time on weekends.
    unit/appartment> low maintenance, however body corporates are extremely anal about everything, usually including pets.
    sumary> land for a *win*

    2.) rural = lots of lonely farm boys on the land, see womans weekly for details on hot hunks looking for wives in rural Aus.

    3.a.) you can borrow as much as you want... it's paying it back that can cause problems.

    3.b.) this can be tricky, having a live in owner/boarder relationship... who makes the rules, can deteriorate into a dictatorship, rather than a democracy... what happens when your boarder posts an open house party on face book etc... "sexy people" can also lead to sex.. then it can get complicated with defacto part ownership of the house legalities... like really complicated, they can take you for half of everything after 12 months of sharing residence.

    4.) boxers are hypo and have a pea for a brain, this is a cute combination at first.. but unfortunately they never mature and most are untrainable.
    they are an active breed than enjoys play fighting with other dogs... sometimes the other dog dose'nt know it is "play" fighting though, so trips to the vet for stitching and stapling are frequent.

    5.) refer above 'TheRuss' comments, plus theres also conveyencing... it always costs more than you budget for, as every greedy little hand takes a cut.

    *generic answers above... personally i think it's a huge thing to undertake on ones own, wait till you are married, work on it together... allthough, investing in a small apartment and re-selling in 5-10 years, when you"ll know where you want to be and what you want to do... still a nice little earner.. not many better things to put your money into in the meantime so to speak... if you get good tenants.
     
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