Will a bank give me a loan?

[dammit]

Ok, am looking to buy a PPOR at postcode 4300 Springfield Lakes. Anyhoo believe I will probably need to approach banks direct, the Mrs is pregnant (only 12 weeks), so we got 6 mths till she pops and I want to buy us a house now while we have the time/etc before the baby arrives.

In 6 mths time she will no longer have an income (except govt maternity leave) then will be off work for who knows. What I'm thinking is we either need to go direct to bank and not tell them anything about being pregnant unless they ask, as we know we can definitely pay the loan, or I just try and get a loan just using my income/etc solo.

I earn 68k gross per year, have been in job for 3 yrs. Mrs earns 40k but only in current job 3 mths.

No loans/debts/defaults etc except we have a car loan @ $300p/mth, we only have $4000 left to pay off on it (have $ parked in there for re-draw offsetting interest), will this be a nuisance/should we just pay it off and clear it because i'd rather keep those $4k for the house even though interest rate is less but to use for deposit etc.

Deposit we have 24k including the above 4k or 20k excluding it, house we are looking to buy is $350k so 5% deposit would be say $17.5k and stamp duty 3.5k plus a few other purchase expenses (solicitor/loan/application fees/pest bld) which we can easily cover with our current income.

Would it be best to get this loan joint, or even joint+tell banks we are pregnant. All sums show us that we can easily service the loan with 1 income. Loan would be 332,500 and cost say $535 pw, current rent is $600pw anyway. I cant really see any lender taking mrs income in account anyway given she's 3 mth in job, pregnant, her probation period is 6 mths.

LMI would (hopefully) be capitalised. Or was thinking of St George Family Pledge and asking Dad to put up a % of his property as security. ?? Anyone recommend any banks, CBA? We r currently with BankWest and a credit union.

 

[Rolf Latham]

Hiya


Some things to consider

1. you might need a fixed rate to mitigate the risk of future sharp rises.
2. At your quoted 535 per week, plus your normalish house costs, your net available spenidng money would be under 400 a week, or 125 or so below the poverty line
3. Its much easier to reduce your rent from 600 than to reduce your mortgage payment
4. Family assistance may be kinder if you are renting

ta
rolf

 

[aul]

ok, it looks like you will nett about $1k a week from wages.
Loan repayments- I think you should use min 7.5% interest as your basis, if not more. 332k @ 7.5% = $565/week.

Living expenses - with a baby on the way, I am guessing with all costs involved, you would be looking at min $200 per week -

baby
electricity
council rates
groceries
health care

Plus $70 per week car loan.

Total - $835 already.
Don't know if there is much buffer there on the 1 income at present.

however, if you expect pay increases or your mrs to go back to work after baby is born, you would be in a better situation.
However, bank will not look at all that

 

[alexlee]

You'd need to borrow maybe 95% LVR, which will involve a decent slug of LMI.

Just IO repayments, will be about 29k a year @ 7.5%, as aul said.

If have no other savings and it'll be on your income of 68k (assuming that's package). After super 62k. After tax 50k. You'll be paying 60% of your after tax on interest alone.

That leaves you with 20k. Take another 5k for rates, utilities, insurance, etc.

Basically, you'd be one nappy / baby wipe run away from the red. Even if the bank will lend to you, I'd consider it carefully.

 

[BuildingBlocks]

To put things in perspective, is the $350k property the same quality as the one you are renting currently for $600wk, I am guessing not and that the $350k property is a downgrade in property location, size or quality to what you are renting?

So if you were to rent something similar to that property worth $350k instead of your current one, maybe your rent would be more like $300-400wk, which makes renting a more attractive option and you can think about a cheaper investment property with a higher return instead?

 

[dammit]

thanks for all the feedback so far. I should also mention that I was thinking direct with banks because was thinking if I used a broker they'd have to disclose to the bank about our pregnancy.

my income is 68k gross excl super, or $1020pw net/cash.

a 30yr 7.5% on 332k= $535pw,
living expenses of bills, rates, insurance, groceries, fuel = $400pw
hmm your right, that only leaves $85/pw buffer or 'spending $' and I know the bank algorithm would be much more living expenses than us. and if interest rates went up we'd be screwed.

so really to make this happen we need to lower the borrow amount, either by having a bigger deposit, or buying a cheaper house.

the ones we have been looking at are brand new or less than 4 yrs old, so I don't anticipate any real maintenance issues just yet with them.

300k house 95% lend would be $460pw, that would give another 75pw buffer so we'd have $160pw left over from the one income.

can any one give me any advice on that remaining 4k we have in a car loan?

Im expecting(hoping) we won't have to pay LMI because was considering offering my family a % share in the house (and when we sell they get their % back plus their % of profit), or seeing if they will do a family guarantee loan to avoid LMI.

@BuildingBlocks - the 350k property is a step up quality wise, brand new instead of old, but location not as good, at the moment 3km to Bris CBD and if we bought would be 25km, a sacrifice we are prepared to make for owning our own place(again). Thought of investment property but really want our own place given we are starting a family.

 

[alexlee]

Im expecting(hoping) we won't have to pay LMI because was considering offering my family a % share in the house (and when we sell they get their % back plus their % of profit), or seeing if they will do a family guarantee loan to avoid LMI.

Say the loan was $332k. Every 0.25% increase in rates would be $16 extra a week. Usually, it's a good idea to budget for at least 2% increase in rates, especially as you have no other savings and no equity anywhere else. Also, have you checked out the price of nappies and baby wipes? Those will become weekly shopping items. Then there's all the stuff you'll have to buy like a baby car seat and bottles and so on.

A buffer of $85 a week is so thin you can see through it.

 

[Pa1nter]

the ones we have been looking at are brand new or less than 4 yrs old, so I don't anticipate any real maintenance issues just yet with them.

There are hundreds of people that just got flooded that didn't anticipate any problems,always expect the unexpected as it always seems to pop up when you least expect it.

 

[dammit]

There are hundreds of people that just got flooded that didn't anticipate any problems,always expect the unexpected as it always seems to pop up when you least expect it.

I know... I was one of them :-(, water level at our house was 4 metres. I've decided to pay out this car loan, to clear the slate on it. then will take a stab at getting approval from one lender, cannot yet decide on our credit union, bankwest or a bank we aren't currently customers of..there's some really good advice here and I think we will fix the loan (if we can get it) on a ~3yr which would be around 7.5% rate to give us a bit of certainty.

we have crunched numbers again and again and believe we will have no trouble meeting the commitments. finding a bank that agrees will be another story! esp as Mrs income most likely wont be counted 'cos she's only been in her job 3 mths and has another 3mths to go on her probation..