First Property guidance please!

[MissM]

Dear All

Firstly can I say what a wonderful site - I have read through this over the last few months and its given me some really good insight and motivation to read - have finished Jan Somers book and Steves book which was great!

I am not sure whether what I am going through currently is fear or lack of knowledge but would appreciate any advice

I have approx $60k save and know its time to do something with it rather than leaving it in the bank - property is my first choice.

Been to a MB who advises I can get a loan of $400k without a problem of servicing issues and using the FHOG I would be putting in very little as my thoughts are to set up an off-set account and do the loan IO - leaving in the balance in the off-set

I would like to buy in NOrth Sydney as that is where I live but the 2 bedroom units are now out of reach on what I wish to borrow - so next thought is 2 bedroom in the Lane Cove area - close to the village

Has any one got a view on this area - I am only familiar with the Crows Nest/North Syd and Lane Cove areas

I would ike to live in it initially - tied of paying $1,800 in rent each month with a view to making it an IP - once I have more savings in the off-set account and decide where I would actually like my first home to be.

- how do I know if this is a growth area?

- is a 2 bedroom unit in Lane Cove and better investment than a 1 bedder in Crows Nest? - I think it is but fear keeps stopping me from making any moves

Sorry for the long email - there is lots of other questions I have - trying to reduce the initial fear of just "doing it" - but would really appreciate some feedback if anyone is familiar with these areas.

Cheers

Miss M

 

[alexlee]

Been to a MB who advises I can get a loan of $400k without a problem of servicing issues and using the FHOG I would be putting in very little as my thoughts are to set up an off-set account and do the loan IO - leaving in the balance in the off-set

I would ike to live in it initially - tied of paying $1,800 in rent each month with a view to making it an IP - once I have more savings in the off-set account and decide where I would actually like my first home to be.

MissM, if you borrow say $340k at the current mortgage rate of around 8.7%, your interest only payments will be 2,500 per month. Does your budget allow this, and repairs, council rates, etc as well?

In terms of area, if it was me I would look further up the north shore instead of going to Lane Cove, but that's just because I put a lot of value on trainlines. For 400k you can find 2 bed units around Artarmon, Waverton, etc?
Alex

 

[MissM]

Hi Alex

The MB provided me with a funds requirement summary on $400k - IO at 8.27% - monthly repayments of $2,678

This doesn't take into the equation council rates and other payments I would need to make when I am in the property

I earn $100k so feel I have the capacity to make these payments - may be its just fear that is stopping me.

The figures differ from yours - what am I missing?

Miss M

 

[Rolf Latham]

Hiya Miss M

8.27 is a while ago

ta
rolf

 

[alexlee]

Hi Alex

The MB provided me with a funds requirement summary on $400k - IO at 8.27% - monthly repayments of $2,678

This doesn't take into the equation council rates and other payments I would need to make when I am in the property

I earn $100k so feel I have the capacity to make these payments - may be its just fear that is stopping me.

The figures differ from yours - what am I missing?

As Rolf said, you're using a rate that may no longer be available at the moment. How long ago did your MB give you those figures? You may want to speak to the MB again to see if lending criteria have changed. Also, you're implying borrowing 100% LVR, which means you'll have to pay LMI.

At $100k you certainly have the income to support a 400k loan. I would ask whether you have a long term plan. After you buy this property, then what? Will you buy more? Or just trade up in your own place until you get what you want (whatever that is)?

Rental yields are still lower than interest rates at the moment, and as you can see your mortgage payments will be much higher than the rent on an equivalent place. For example, would you consider buying an investment property first and continuing to live in your rented place now?
Alex

 

[MissM]

Alex/Rolf

Apologies the MB schedule was done on 1 April 08 so interest rates are different now.

My goal is to obtain an asset that I can build on from there - if I was to buy an IP, I lose the stamp duty exemption in NSW - so I my initial thought is to buy and live in it for a while would then like to hold onto it as an IP (also thinking of tax advantages in doing so - although I know this shouldn't be the only reason). If during that time I continue to put more funds in the off-set account that should give me enough to look at another property - is my train of thought to far out there?

MissM

 

[Rob Williams]

Miss M, don't let fear hold you back! There will always be an element of fear. There will always be some seeds of doubt. There will always be an element of indecision. It's how you manage it that counts.
I've been holding myself back for many years, now. I'd be retiring now if I had tamed my "fear cobra" some years back.
Whether it's property or shares, I believe it's more about mindset that which loan, fixed or variable, which suburb, timing of the market etc etc.
There are many books on mindset. I've recently read Secrets of the Millionaire Mind. it has some good ideas in it that you might find helpful.
You don't have to get it all 100% right. Just get going and fine tune along the way.
You earn a good income. Have faith in yourself. Just Do It!!!