Offer was Accepted!

F

Family Man

Hey all,

So i went to have a look at an unusually low priced house in the nice part of town. The house was quite small but had the essentials and was very tidy. We (my wife and me) both loved it and could see everytihng setup in this new place.

after the weekend, i put an offer to the REA who then relayed to the vendors who accepted the same day, next day contract was signed and we are on our way to owning our first home.

Now one thing we both agreed on was that the kitchen needed some changes/updates before we moved in.

so what is the best way to go about funding a small kitchen reno since i have minimal spare cash. i know the best thing to do would be save and do it later but we have small kids (2 x 7m/o and 1 x 4 y/o) and if it gets pushed back it will never get done.

Now i originaly thought a "top up" or something similar might be possible as i got the house well below median price for the area, but not sure if thats possible as no suprise the bank valued the house at purchase price ($260k)

Realestate.com.au Listing

minimum deposit and LMI takes the LVR to 96%

If its not obvious from the photos, the plan is to remove the vertical cupboard completely and put a large island bench bar that can sit 4. and add a pantry and fridge space to the end of the other all towards the door.
 
Hiya

Congrats on your new home :)

If you're already borrowing at max lvr then it's probably not going to be possible to pull equity shortly after settlement.

Which lender is it with?

Cheers

Jamie
 
Hi Family Man

First of all, congrats on getting the offer accepted.

You are planning to pay minimal deposit (thus pay maximum LMI) and use the spare cash to update a kitchen which is actually not that bad? In your position, I wouldn't do it.

I would rather try to get some temporary loans from friends and family and make the deposit higher (say 12%) and pay less LMI. Then pay them back using future savings. You can revalue the house later (after painting tidying up etc) and pull out some equity and renovate the kitchen.
 
well LMI is $5800. Quick online calculator shows if i can get the deposit up to 31k (88% LVR) LMI will reduce to $2800. i dont have anyone that could "lend" me money,
The only person that could probably assist is my Father in law, he has plenty of equity across a few properties.

I am paying the minimum deposit because thats pretty much all i have, i have left myself with ~$3000 after everything is settled to be on the safe side for the first few weeks.

Lender is CBA

The main reason for doing kitchen work is that we would spend 90% of our time as a family in the loungeroom and kitchen area.
 
Congrats on your first purchase!
I would have also said a loan from family but personally I would avoid going down the road of father in law needing to release equity which all seems a bit messy for this.

Honestly as far as first home kitchens go that is actually nice! Yes the tall cupboard is quite random but apart from that it looks good. If it were garbage I would understand but it really isn't. Just my 2 cents, why not live in it and see how it goes? You may find it fine and hence save yourself a lot of money you may want to use elsewhere.
 
Borrowing from family is not recommended. You should get a quote for what you're trying to do and if its not that high, maybe you can get a personal loan from the bank. Or maybe with your loan, you may be given a credit card.

I went to BoQ to open a bank account and enquired about a home loan. It comes with a credit card.

I think you're on the right path to get the reno done asap because otherwise you get comfortable with it and will never do it hey?
 
techie said:
Borrowing from family is not recommended. You should get a quote for what you're trying to do and if its not that high, maybe you can get a personal loan from the bank. Or maybe with your loan, you may be given a credit card.

I went to BoQ to open a bank account and enquired about a home loan. It comes with a credit card.

I think you're on the right path to get the reno done asap because otherwise you get comfortable with it and will never do it hey?
Click to expand...

If done correctly a family loan can be a win/win situation. For example a personal loan is what 13%? And a standard deposit account is around 2%? (Just throwing these figures out but it's give or take a small amount).

So if you had a family member with 5k sitting in the bank at 2% then why not loan that at say 6%? They get a 4% bonus on there investment and you save 7%.

Now Ofcourse there is the moral side of things which is why it would need to be drawn up correctly but I know for example I am loaning of my mum and there is no way I would not pay her back.
 
Family Man said:
The only person that could probably assist is my Father in law, he has plenty of equity across a few properties..
Click to expand...

im not usually into fam guarantees, but you could avoid LMI alltogether and borrow 105 % which has long term benefits.

Secured to an IP the risk to the father in laws PPOR is quite reduced.

speak to your FIL, then your banker/broker

ta

rolf
 
Congrats on your new home.

Frankly, I would advise leaving the kitchen as is. You have two little ones and kitchens can be dangerous places for children.

For now, buy two kiddie gates and make the kitchen a child free zone while cooking.
Marg
 
Leave the kitchen, it's only the floor that I think is dubious and it will be fine. I lived with a horrible kitchen much worse than that for four years before spending to replace it, and I was fine.
 
I'm with the "leave the kitchen as it is" camp. Looks pretty good to me. If I did anything at all, I would cut down the cupboard that blocks the kitchen from the rest of the living room, down to bench height and patch the ceiling. You will lose storage though, so weigh that loss up with the benefit you gain by opening up the kitchen to the living areas.

I would replace the bathroom vanity with a nice new one for a couple of hundred (and remove the lace curtains).
 
Congratulations Family Man!

You've done well to have the loan approved and buy the house. I'm with the others - I'd leave the kitchen as it is. The house looks great as it is!

Set up an offset account against the loan and concentrate on stashing as much cash into this as you can.

When you feel comfortable, buy an investment property and keep going this way.

Over time, you'll be in a good financial position and then you can renovate etc.

Regards Jason.
 
Thanks for all the tips guys, i may just end up cutting down the "divider".

I'm jumping on the avoid family money bandwagon, i will be the first of many siblings that hasn't had to ask for the 'old mans' money.

I suppose i can always just remove that divider wall and add in a 2x900m double drawer cabinet and matching benchtop until we are in a better financial position.
It would allow us to put in small amounts of money into other parts of the house i.e paint, plaster, tiles. All of which we will do ourselves.
 
jingo said:
I'd leave the kitchen as it is. The house looks great as it is!

Set up an offset account against the loan and concentrate on stashing as much cash into this as you can.

When you feel comfortable, buy an investment property and keep going this way.

Over time, you'll be in a good financial position and then you can renovate etc.
Click to expand...

Some good advice. It seems renovating this kitchen is not going to create much equity. Don't waste your money on it at this point. You may even buy a better PPOR (a 4x2 or something) after some years.

Family man, it is said that money is made when you buy and it seems you have bought well. You have already created some equity. If you keep saving as well, you definitely can buy IPs sooner or later. You are quite young too. I reckon it is time to increase your equity and asset base.
 
Singo said:
Some good advice. It seems renovating this kitchen is not going to create much equity. Don't waste your money on it at this point. You may even buy a better PPOR (a 4x2 or something) after some years.

Family man, it is said that money is made when you buy and it seems you have bought well. You have already created some equity. If you keep saving as well, you definitely can buy IPs sooner or later. You are quite young too. I reckon it is time to increase your equity and asset base.
Click to expand...

Thanks for the advice and kind words, I believe we have made a good decision. I feel we will be in the place for a LOOONG time, but you never know what the future will bring.

EDIT: Time to go to work, SUNDAY DOUBLE TIME!!!!
 
I love this little place - I think you'll all be happy here. Definitely agree with the no-family borrowing + minimal renos to kitchen philosopy. Maybe the photos are really good but the kitchen looks fantastic - especially compared to the very old and neglected kitchen of my first property that I lived with for several years.
I agree with Singo - get yourself some equity and peace of mind so that you can enjoy the time you have with your family. Good buy! So nice to live in Rockie :)
 
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