How to get a mortgage

[Guest Frank44122]

Hi everyone,

just wondering how long you have to have been working and living in oz before you can apply for a mortgage to buy a house? We will be coming over as PR and have approx 50,000 for a deposit. Do we have to build up an oz credit rating over a certain amount of time in order to apply and be accepted for a mortgage?

Any advice would be great,

thanks everyone

[Guest Claire-n-tel]

Hi Frank!....you have to be employed and have completed your trial period, usually 3 or 6 months. Mortgages are worked out differently here as to how much you are able to get, not a set amount like in uk (eg 3 1/2 times your salary) but worked out on your salary, outgoings, debts, dependants etc.

[NicF]

We were able to get a mortgage when my OH was just two months in to his six month probation but we only needed to borrow a third of the total amount needed for a block of land at the time. Some mortgage providers are more likely to lend earlier than others but as Claire-n-tel said they lend based on affordability rather than a multiple of earnings. When we got our mortgage I provided a spreadsheet showing all our income and outgoings to demonstrate how much we could afford. Having others loans will reduce the amount you can borrow but rent is not counted as once you have bought the house you will not be paying rent. A mortgage advisor can be really helpful when looking for your first mortgage here as they will know which lenders are most likely to lend and which are the best deals at the time. They will also be able to advise if you are eligible for any of the first home owner grants.

[guspjmh]

Speak to Andrew from Vista, we'd only been here about 8 weeks when he got us sorted with a mortgage. You will need at least a 20% deposit though (unless you want to pay mortgage insurance which is pricey), so a 50k deposit will only get you a house for about $250k which doesn't stretch too far.

 

Again, I recommend Vista financial, they are great.

[Guest loopylisa]

Sorry but I disagree you need a 20% deposit. Suck it up. Get a house you want. Pay the LMI (lenders mortgage insurance) it is added on the amount you borrow anyway so you are not paying it outright out of your savings. Plummet extra into repayments to make up for the extra cost the LMI will add to the loan and that way you have a better property than 250k will buy you on your deposit. You can get a loan/property for much more than 250k with a 50k deposit!! However the closer you can be to the 85% LVR the better but you don't 'need' a 20% deposit. I mean crikey if you needed a 20% deposit no one would ever buy houses and first home owners like me wouldn't exist!! The market is on the rise after flatening out don't wait, the prices will rise faster than you can save your 20% deposit so you will be no better off

[Guest loopylisa]

but rent is not counted as once you have bought the house you will not be paying rent.

 

Yes but they do count the rent as evidence you can service the loan? Some lenders also use it as evidence of genuine savings if you rented through an agent

[Robbiep]

Dont forgot stamp duty, which is close to $20,000 for a house valued at $400,000 (median priced house in Adelaide)

[Keith & Linda]

Sorry but I disagree you need a 20% deposit. Suck it up. Get a house you want. Pay the LMI (lenders mortgage insurance) it is added on the amount you borrow anyway so you are not paying it outright out of your savings. Plummet extra into repayments to make up for the extra cost the LMI will add to the loan and that way you have a better property than 250k will buy you on your deposit. You can get a loan/property for much more than 250k with a 50k deposit!! However the closer you can be to the 85% LVR the better but you don't 'need' a 20% deposit. I mean crikey if you needed a 20% deposit no one would ever buy houses and first home owners like me wouldn't exist!! The market is on the rise after flatening out don't wait, the prices will rise faster than you can save your 20% deposit so you will be no better off

 

The name makes sense now! You get a house that you can afford, and best that any money goes into paying off the loan and not insurances (and interest on insurances), that way you build up the equity in the property quicker so as enabling you to get a better deposit for your next move up the property ladder.

[Guest loopylisa]

The name makes sense now! You get a house that you can afford, and best that any money goes into paying off the loan and not insurances (and interest on insurances), that way you build up the equity in the property quicker so as enabling you to get a better deposit for your next move up the property ladder.

 

Yes because buying a house is all about common sense and just about the bottom dollar and nothing about creating a lifestyle *rolls eyes* #insertsarcasm here. Re: buy only what you can afford?! I mean who really does this. As long as you can service the loan *technically* you can afford it, as long as the bank will give you finance (major lender) *technically* you an afford it.

 

According to your logic of only buying what you can afford one should only be buying caravans. Your opinion is that 20% deposit is what constitutes one affording it. This is opinion not fact. I have already outlined why this might not be a viable option for those with smaller deposits in the context of the housing market and how you can counteract this whilst also getting some lifestyle points which are important for well-being which is arguably a valuable a commodity as equity. Disagree if you like but try to do it with well argued facts instead of obvious point scoring

[Guest Helchops]

The name makes sense now! You get a house that you can afford, and best that any money goes into paying off the loan and not insurances (and interest on insurances), that way you build up the equity in the property quicker so as enabling you to get a better deposit for your next move up the property ladder.

 

Yep, I'm with you. Pay the loan as quickly as you can!! We just purchased a small home...better that and paying it off in ten years through overpayments than stretching ourselves for thirty years and never making an overpayment.

I think materially, a large home, beautifully furnished is a dream we all have but we're all renters from Mother Earth remember, and lifestyle is equally important...and being able to afford some kind of lifestyle is vital.

Just so you know, we could have borrowed $800k. We actually borrowed $280k. The 'difference' between those payments could make us mortgage free in as little as 5/6 years. Not that we could have afforded $800k. The bank got it stupidly wrong. It's lucky we we're not of the mindset to grab what we could get!

OP : We needed six months on one occupation and three on the second applicant.

[Guest AngPhil]

Hi everyone,

just wondering how long you have to have been working and living in oz before you can apply for a mortgage to buy a house? We will be coming over as PR and have approx 50,000 for a deposit. Do we have to build up an oz credit rating over a certain amount of time in order to apply and be accepted for a mortgage?

Any advice would be great,

thanks everyone

 

The best advice I could give you is speak to Andy and Stacey at Vista. They are fantastic and will tell you exactly what you can afford and how much you will be paying. We still have our house in the UK (with all our money), so we borrowed just over 90% on our build, Andy and Stacey made sure we could afford it. We are only paying slightly more than we were paying rent and have our own home, which is exactly as we wanted. Buying a house is a personal choice and there is nothing wrong with borrowing more than 80%, as long as you are sensible and don't over stretch yourself. We needed 3 months payslips from both my husband and myself. To be honest I think you need to live here for a bit to decide what you want, the stamp duty is massive, so it pays to make sure you buy the right house.

 

Good luck.

[Guest Frank44122]

For the first few years are income will probably be around 55000-60000 as my wife won't be working or will jut be doing part time casual work so am not even sure we could get a mortgage on this wage despite having a 50000 deposit?! Will have a look at talking to vista! thanks for telling me about them!

[Keith & Linda]

Yes because buying a house is all about common sense and just about the bottom dollar and nothing about creating a lifestyle *rolls eyes* #insertsarcasm here. Re: buy only what you can afford?! I mean who really does this. As long as you can service the loan *technically* you can afford it, as long as the bank will give you finance (major lender) *technically* you an afford it.

 

According to your logic of only buying what you can afford one should only be buying caravans. Your opinion is that 20% deposit is what constitutes one affording it. This is opinion not fact. I have already outlined why this might not be a viable option for those with smaller deposits in the context of the housing market and how you can counteract this whilst also getting some lifestyle points which are important for well-being which is arguably a valuable a commodity as equity. Disagree if you like but try to do it with well argued facts instead of obvious point scoring

 

Well obviously not yourself! but there are a lot more people out there than you think, that do, but you need to read and be able to understand what I wrote and not promote what you believe as the norm but is in fact short sighted non-sensible advice. By buying what you can afford did not exclude the mortgage insurance option, just need to factor everything in on your affordability. Paying down the mortgage as quickly as possible is basic sound financial sense, using that money on insurances is not, but may well be one of the evils one has to tolerate, but we need to minimize and/or eliminate this wherever and as quickly as possible.

 

Somebody I know got a mortgage they could afford, they managed to pay off that mortgage in 5 & 1/2 years (using an excellent mortgage type, and adjusted lifestyle to suit), used that equity to move up the property ladder, with the help of another smaller mortgage which was paid off in 3 years, they now have a mortgage free home valued at $850k in less than 9 years, and are able to buy investment properties to aid future financial security, something which was once only a dream for me to achieve. May we ask how yours heading along?

 

PS. that person I know is me! so my advice comes from tested and proved experience, but this could be anybody and I do know of others both in Aus and UK whom have similar stories.

[Keith & Linda]

For the first few years are income will probably be around 55000-60000 as my wife won't be working or will jut be doing part time casual work so am not even sure we could get a mortgage on this wage despite having a 50000 deposit?! Will have a look at talking to vista! thanks for telling me about them!

 

I wish you and your family well Frank, and hope you can make it happen:smile:

[Guest Frank44122]

[quote

PS. that person I know is me! so my advice comes from tested and proved experience, but this could be anybody and I do know of others both in Aus and UK whom have similar stories.

 

 

Wow, can only dream of that happening for us! Fingers crosses we might be able to have something like that in oz! Thank you:biggrin:

[guspjmh]

We have done similar on our first Ozzie house. We wanted to keep savings aside to enjoy the lifestyle (for the pool and a boat maybe if Kate lets me...) so went for a property about $100k less than we could have got had we stretched ourselves. I'm planning to make overpayments of about 10% on the mortgage from the get-go, and when Kate starts to work we may be able to reduce the term.

 

YOu have to remember that the main reason people made the move was to enjoy the quality of life Australia has to offer - hardly likely if you have a crippling mortgage and no savings.

[Guest BurgessFamily]

Just remember, interest rates are at or near the lowest level EVER (therefore may go up quicker than expected).

Land/Property prices may shoot up, stay still, or even go down.

When planning any major financial investment, always try to allow for the unexpected.

Previous major gains in property prices are no indication of future performance.

[Keith & Linda]

We have done similar on our first Ozzie house. We wanted to keep savings aside to enjoy the lifestyle (for the pool and a boat maybe if Kate lets me...) so went for a property about $100k less than we could have got had we stretched ourselves. I'm planning to make overpayments of about 10% on the mortgage from the get-go, and when Kate starts to work we may be able to reduce the term.

 

YOu have to remember that the main reason people made the move was to enjoy the quality of life Australia has to offer - hardly likely if you have a crippling mortgage and no savings.

 

Everybody will need to work out what best suits them, all our savings went into reducing the mortgage down as quickly as possible and thus less interest to pay, the type of mortgage we had, where initially it was frightening, especially to the (my!) wife, but after a couple of years she saw how quickly we were paying it off, the mortgage also had the facility to be drawn against up to the maximum should we have decided to renovate, buy a boat or flash car on the lower interest rate but we personally did not really see any advantage for us in doing that (got a brand new, loan free car now though). We still had the lifestyle, topical pool in the garden, half acre block, beaches, day/weekend trips, picnics & BBQ's but all within what we wanted to afford as against what we possibly could do/have, It was our choice to look at the longer term issue and I must say we certainly reap the benefits of our earlier choices now.

This method worked extremely well for us, so that is why I am sharing my experience, but I am also sure other methods/choices work for others, in the end each person/couple have to be happy and content in having made their own informed/researched/lifestyle choices.

 

happy life to all.

Keith

[Keith & Linda]

Just remember, interest rates are at or near the lowest level EVER (therefore may go up quicker than expected).

Land/Property prices may shoot up, stay still, or even go down.

When planning any major financial investment, always try to allow for the unexpected.

Previous major gains in property prices are no indication of future performance.

 

True, you have to stay in reality, only use what you have got and not what you may have. You have to run with and try to use the cycles and not fight or be scared of them, after all they have always been part of life.

[GarethB]

Totally agree Lisa, at the end of the day if you can own the roof over your head at the same or similar cost to renting then a 5% deposit is just fine. I purchased my house 18 months ago with only a 5% deposit and yes the LMI was a rip off but here today my house has now been valued at $140K more than my purchase price (with less than $20K spent on renos). I remember my best mate having a 100% mortgage in the UK back in 1999,anyone remember those?, paid heaps extra in interest charges (and LMI) but when he also moved to Adelaide back in 2006 he used the equity from his UK 2 bedroom shoebox to buy one of those 6 bedroom cardboard houses in Mawson Lakes, in cash!

It is about emotion and ultimately being happy where you live, whilst being sensible about what you can afford. Isn't that the reason why we all moved from the UK to live here? If you have a 20% deposit great, I did for my first house in regional SA in 2007, but moving back to Adelaide that wasn't the case..........if I'd limited myself to the belief that I had have a 20% deposit to move to Adelaide I'd still be trapped in a regional SA city with next to zero growth in equity and far fewer of the lifestyle benefits of living in an Adelaide suburb. The only thing I would recommend is that as a couple ensure that one wage can cover the mortgage, that way if circumstances change eg kids, job change/loss at least one wage is keeping that roof over your head.

[Guest Frank44122]

Thanks for all advice guys, great to get different opinions and perspectives. Just have to wait and see what vista say once we get there. GarathB, only looking at my salary I think as wife won't have full time wrk until all kids are at school. So mortgage would be bases on 50000-60000 wage. I know what you mean, frustrating paying rent when you could have similar mortgage repayments and potentially be gaining some money in the long run, rented for about 5 years in uk before buying due to deposit requirements even though we were paying the same as our mortgage now, so frustrating!