Affordability

[Sharpstone888]

Dear Forumites, this is my first post on somersoft.

I am interested in buying a 3 bedder in sydney's west early next year. Though they are advertised at around 300-320K. By the time I purchase I will have a total 30K deposit (including the 14K FHOG). My partner and I will have a combined income of 35K, net (note we are 20, and I am a part time uni student, thats why its low). With the assumption that the bank will lend on the loan repayments being 30% of income we would be able to borrow approximately 220K (for a total purchase price of 250K), this is assuming we use a 6% interest rate and it is IO (which it would be, with 100% offset). We would live in it for 6 months as our PPOR then move back with parents and turn it into an IP.

My question is, is the 250K right? My partners dad says he will go guarantor for us, how much does this help us out.

Also with the income proof, do they ask for previous tax returns, because if so we stand no chance in hell at getting any loan, there would need to be a sort of recent (last month) paychecks for us to prove this 35K annual net income.

What does everyone think?

Chris

 

[RumpledElf]

You're screwed!

You have to go fulldoc - you need an ABN etc for a decent length of time to go lodoc and even then you're stuck with low lending levels if you want to fudge your income. They'll take recent payslips rather than a year's record, when I got my first fulldoc loan I was a student on a tutor's wage and they were happy with a mere acceptance letter for my graduate job that hadn't started yet. And this was 10 years ago, when credit wasn't so loose ...

You're only 20, your income can only go up, if you *must* get a house just try and hold off a bit and save lots of money. Ignore the grant, you'll be better off waiting longer and saving more than rushing in early just to get a few thousand more off the government.

 

[Sharpstone888]

Thanks RE, I have not read much on low/full doc loans, do you reckon you could give me a link to a good thread on it.

I thought that low doc and full doc were for people who were income (unreliable/low) but deposit large and that to get low doc you would need to have a LVR under 80 for sure???

How does the guarantor affect this? Nothing?!?!?!?

Chris

 

[RumpledElf]

Full doc is the one where you supply verifiable proof of your earnings ... payslips etc. You pay mortgage insurance over 80% but you can go higher. I don't pay much attention to this sort of loan, despite having got 3 fulldoc loans in the distant past ...

Lo doc you just sign something to say "I earn X" but recently they capped the lend on these to 60%, you want more you have to verify your income with BAS statements. These are the ones I've been watching as we're self-employed and recently got a lo-doc 60% loan.

I have absolutely no idea how guarantoring affects the amount you can lend, I just know its a bad idea to go guarantor as you might get stuck with the entire loan to pay off, as has happened sometimes. I'm sure a mortgage broker will jump on this thread before dinner time

 

[Rolf Latham]

Hiya

best to avoid the guarantor thing if you can

Will be a toughie all round

ta
rolf

 

[Sharpstone888]

Full Doc sounds alright so far. I have to provide payslips, how far back? Does a full doc loan lead to a higher interest rate (1-2% above market)???

If the rate is higher then can I after say 2 years when my income has increased much more and I have paid more off the loan, move the loan back down to normal to stop the increased interest rate???

Chris

 

[Lamingtons]

Do you have your group certificates? I think you need to get those ready for fulldoc loan as well.

 

[want2bewealthy]

I dont think lenders will accept a guarantour, need mortgage insurance.

 

[Sharpstone888]

I have my group certificates, but our income is rising and our income stated in our group certificates is definetely too low for a loan.

 

[RumpledElf]

Fulldoc is just bank-speak for a "normal" loan. Those are the ones with the *lowest* interest rate!

 

[Lamingtons]

I have my group certificates, but our income is rising and our income stated in our group certificates is definetely too low for a loan.

Yeah my group certificates were pretty sad too.
But of course they will look at your contract of employment (the new one) and payslips. I think i had to provide 3 payslips.

 

[Sharpstone888]

Fulldoc is just bank-speak for a "normal" loan. Those are the ones with the *lowest* interest rate!

Hahah, I feel like a real idiot, I was here thinking that you can get normal loans, low doc and full doc.. silly me..

Well, there is actually very little chance of me getting this new job as it is very competitive and heaps of people applied. So we will consider the situation of my part time work which is continuing since Jul 03'.

My previous group certificate said on it approx ~14K, which next year I will be on 15K. Though, my partner just left tafe and her group certificate was at ~12K and now she is on approx 30K, so there is a massive jump and i'm worried about it, though if I do change my hours soon, and show them in may (i guess not feb) all of our payslips for 2009 then we will see????

Anymore thoughts guys, also thanks so much everyone, so many people, so soon helping me out, thanks.

Chris