ARRRGGGG should I wait a bit longer?

[Belu]

So I am looking into finance at the moment.

Currently I have enough to support a 95% loan with LMI capitalised.

There are a few more options when if I were to pay LMI upfront which I am about 2 months off from saving, at which time I will also have an extra little buffer due to tax refund and I will be on a slightly increased income (only like $2k extra p.a).

There is also a possibility I could be in a new job which will see me on substantially more than I am on now ($15k + p.a).

Most of you know me, and that I have been looking for a long time and now I am in a position to buy, but, with the market in the current flat state it is in, and no really big bargains in the area I am looking at (Essendon units) should I get into a stronger position over the next few months at the risk of being out of the market for that time?

Something I will bring up tonight at MIG but thought I will ask for an opinion on here to give me something to think about.

Cheers

Ben

 

[boomtown]

Barring something extraordinary happening in the immediate vicinity of your proposed purchase (a new train station going in where there was no public transport before) the market isnt going up in the next 2 months. Not with the threat of more interest rate hikes hanging over it. Its dead flat or slightly declining.

Just dont use it as an excuse not to get in at all.

 

[lizzie]

i also would wait the next two months - unless you saw the "ultimate" bargin.

but as you said "there are no big bargins where i am looking" so what is the rush. consolidate your position. find out exactly where you stand and then work from there.

if the deal of the century comes along, you can still take up the option to buy from your current position, so what's the rush? it's a buyers market at the moment so take you time and pick wisely.

boomtown is right - nothing is going to change in the next two months (except for the number of my grey hairs).

you're probably like me and a) don't want to miss the next upturn, b) have some money in the pocket (ours is loc) and it's burning a hole, and c) there are so many oppotunities out there i just want to get amongst them ... but i am biding my time for a couple of months to get a better feel for the market.

 

[boomtown]

But remember - its a lot easier to find desperate sellers in a declining market than it is to find desperate sellers in a rising market.

Feel free to get out there and fire off some rudely low offers.

 

[Belu]

thanks for the advice guys

What do you consider rudely low? say on a 2BR apartment asking $270-300k?

 

[boomtown]

Totally depends on the area.

Im considering marking an offer at about 17% less than what would have been market value 4 months ago.

For you 83% of $270k is $224k.

 

[Belu]

hmm sounds like a good idea - not much to loose i guess

Any other thoughts? Alex? I know you are a "time in market" kind of guy so your thoughts would be appreciated.

 

[alexlee]

hmm sounds like a good idea - not much to loose i guess

Any other thoughts? Alex? I know you are a "time in market" kind of guy so your thoughts would be appreciated.

I’d buy now and buy again later. Your salary and serviceability only goes up from here. I would buy cheap, though, so that if the market falls (and it may well do) and interest rates go up it won’t hurt as much.

However, this is on the assumption that you can buy again soonish (say 12 months) to average things out. Remember that even if prices fall, bank serviceability calcs are changing quickly, so you might not be able to get 95% LVR with LMI capitalised next month.

Given the market, though, I would set a target yield, then just keep making offers at or above that yield.
Alex

 

[pennyk]

Keep in mind that if you are changing jobs, the banks might not want to lend to you during any probation period. Generally, they ask for 3 consecutive pay slips, or at least they did when I last got a loan!!!
So, it may be better to have finance all arranged before moving jobs.
Pen

 

[JamesGG]

Hiya,

Also depends on what sort of deal you're looking at, mate. If you're after a simple buy-and-hold-and-forget, then yes, another two months or so isn't likely to hurt you too much by way of opportunity cost. As you say, it may well put you in a stronger position (employment period for finance notwithstanding, perhaps).

On the other hand, if you're looking at a deal where you're actively adding value (and forgive me, it's been a little while since we talked strategy, mate), then another two months is another two months before you can realise your profit (albeit by refinancing, in all likelihood) and move onto the next deal.

Alex has, as always, given good advice. Work out what you're after and go find it.

Or hey, buy now with a lonnnnng settlement. Best of both worlds, no...?

Cheers

James.

 

[HiredGoon]

I’d buy now and buy again later. Your salary and serviceability only goes up from here.

How can you say this?

Considering that we have low unemployment and may be heading into a downturn, this may not be true.

Also, the market is forecasting another rate rise, and perhaps this guy wants Children, for example.

However, this is on the assumption that you can buy again soonish (say 12 months) to average things out. Remember that even if prices fall, bank serviceability calcs are changing quickly, so you might not be able to get 95% LVR with LMI capitalised next month.

Great idea, lock in high prices during times of loose credit....

Hint: if people after you can't borrow as much, house prices will be lower.

 

[alexlee]

Belu, what's the going rate these days? When you qualify, your salary doubles from what it is now? Especially if you move away from practice?
Alex

 

[Belu]

rate isnt the best in chartered at the moment and 2 years off CA qualified. Am looking at industry though which *could* give me about a 32% increase in pay.

Either way in the next year I will have a 12% increase min.

Looking at buy and hold, I think (this is before heading to MIG where I may be persuaded alternatively) that I will continue to save and make offers which will give me a good return.

Thanks all - as always will keep you updated

 

[chara]

Keep in mind that if you are changing jobs, the banks might not want to lend to you during any probation period. Generally, they ask for 3 consecutive pay slips, or at least they did when I last got a loan!!!
So, it may be better to have finance all arranged before moving jobs.
Pen

How about if I got loan approved but since it was off the plan so the settlement still a long way to go (may be within 8 months) and during that time, let say 4 month before settlement I change job, Is it gonna be a problem? Will the bank check your finance again before settlement? Will the raising interest rate effect your appoval?
For example: with previous IR, I eligible to borrow up to 300K and got approved but after settlement, the IR rise for 2% and that make me only eligible for let say 250K. will they cancel the approval?

Chara