Young first timer needs some advice

[Luckyrooster]

G'day everyone,

I would like to introduce myself to the forums and say that from reading these for the past couple weeks, I have already learnt a huge amount of information. It seems that the people on here are so helpful and willing to foster a useful resource of information amongst others in the community. I'ld like to thank everyone for making this kind of great site work!

Now, I would like to ask a question myself. I am new to investing in property and yet to sign any dotted line. In fact, it's been a lifelong ideal to get started in property investment, but I must admit, I have never had a stable income to get the loan serviced.

I have dabbled in and out of shares for the past couple years. I graduated university in 2003 at age 22 with a media degree (not the most useful degree let me tell you! ) and then set upon realising one of my goals in life which is to travel..travel...and more travel...

From 2004 - 2006, I worked any number of part time/fulltime jobs (temp/casual, etc) to find ways to travel as much as I could all around the world. Now that I'm back, I still want to travel. Once your bitten with the travel bug, it's an illness that requires more travel..hahha.

However, I realise that just working and saving and then travelling - whilst wonderful, is not building me any equity and I have keep starting at zero again once I return home. I keep imagining how I could of been fairly well off, If i had utilised some of the money i used for travel 3 years ago to buy during the soft market of 2004. Oh well.

I have a few favors in my regard, however:

- I Live at home, board free (yes its true at my age (26), but it sure makes saving easy and allows me to have a base to stay between travels)
- I currently earn around 40 000k a year in my newish job (almost 3 months)
- I have savings of around 15 000
- My parents might be willing to act as Guarentor of the mortgage(It's been lightly discussed) in order to remove the need for mortgage insurance.

***I am looking at purchasing a 3 bedroom home in Brisbane's northern suburbs.
---> Great rail map =>
"http://www.railmaps.com.au/brisbane.htm"

I am looking at the above rail map about closeness to Brisbane city and considering a purchase in any number of suburbs 10 - 20 km from the city. Seems like a real hot market there. Although, I have never been to brisbane, it seems to be exhibiting all the good signs of a healthy investment. I would rather buy locally (Sydney), but that seems rather impossible these days. I do like the looks of Bateau Bay on the central coast, but I think it dosn't seem to have the growth prospects of Brisbane.

So, based on my situation,how much of a bank loan do you think I could get?
Can someone explain to me the lending situtations and tips for any particular loans or banks I could look at? I really don't have much experience in that area. I've got a strong credit record, with 2 credit cards and I've never paid interest in my life. I use them for points acrual mainly.

More details:

- I would like to buy in the mid 250'000s.
I would also like to try and make the property neutrally geared (or positive geared) so as to make the rents pay for everything. That would then give me the ability to travel and work overseas and have equity building and the mortgage being paid off while away from home regularly. But the again, maybe I'm dreaming!

Any tips, advice? Others in a similar situation?

Thankyou all for reading and have a great day

- LR

 

[The Y-man]

.

So, based on my situation,how much of a bank loan do you think I could get?
Can someone explain to me the lending situtations and tips for any particular loans or banks I could look at? I really don't have much experience in that area. I've got a strong credit record, with 2 credit cards and I've never paid interest in my life. I use them for points acrual mainly.

- LR

LR, get in touch with a (good) mortgage broker.

Cheers,

The Y-man

 

[The Y-man]

then set upon realising one of my goals in life which is to travel..travel...and more travel...

From 2004 - 2006, I worked any number of part time/fulltime jobs (temp/casual, etc) to find ways to travel as much as I could all around the world. Now that I'm back, I still want to travel. Once your bitten with the travel bug, it's an illness that requires more travel..hahha.

- LR

Ever thougth about getting a job that pays for you to travel? My brother (had to) go to London, Paris, Milan, New York etc at least once a year....

Cheers,

The Y-man

 

[Andrew_A]

I like the idea of getting a chunk of dirt near the rail in the North of Brisbane, I'm biased though.

Why not hop on the train one day and take a notebook and camera? Or even better go for a bike ride around suburbs of interest and talk to some agents.

The market is smoking at the moment, and beats me why or what it will do in the future. No time like today to be doing some research though. For that price range I suspect you will need to look closer to 20 than 10k from the CBD, or do enough leg work to pick up a great bargain for a 3br house.

** Well in Sydney the homework might be harder to do, but airfares are still quite cheap I think.

 

[JLo]

Hi Luckyrooster,

You can just hop into any bank and have a brief discussion with the customer service. Usually they will give you a good indicator if you need to speak to a loans officer or not, after seeing your savings and income slip. Having said that, you may explore the option of directly speaking to a mortgage broker as suggested by Y-man.

I just spoke to Westpac today (not because I think they're the best, just cause it was convenient ) by coincidence.

They directed me to this site:


Westpac Home Loan Calculator

which is neat cause I think it includes Land Tax for different states and tells you all your upfront costs and regular payments

I used this as well:

Mortgage Choice


Anyway, hope that helps. Nothing substitutes speaking to a good broker, of which I have no suggestions I'm afraid. Maybe the Sydneysider members can suggest one?


Regards,

J

 

[MishMash]

Hi

Definitely speak to a broker, they can look at your situation and give you a more accurate figure on what you can borrow than the various net calculators give you.
I find the mortgage choice, anz, westpac calcs all vary widely when i enter the same financial info into each one
A broker can recommend the best type of loan to suit your situations.

Some good brokers on the forum are Rolf Latham, Rolf Schaefer, Simon & Kristine.

I am in the process of trying to obtain a home loan for my second property, i'm looking to buy in the same price range as you but in SW Sydney.

I was earning exactly the same income as you when i obtained my first loan. I had $21,000 saved for a deposit and used the $7,000 fhog to pay costs. I had one credit card with $1,000 limit. The absolute maximum that i was able to borrow was $228,000 (the repayments on this at my 6.55% rate are $365 per week).

Good luck.

 

[Luckyrooster]

Hey thanks to everyone who posted. That's some really good advice - cheers!

A couple of questions:

- Does it cost to speak to a mortgage broker about lending? And if it does, what is typical of the price involved? Any good reccomendations?

- Is it a bad strategy to buy at start of a boom in a housing cycle? (like I think we are now, particularly in brisbane)

- Right now, in a strong economy and mining boom - do you think I am better taking a variable or fixed rate of interest?

- Are shared mortgages with siblings encouraged if you know it helps you to borrow more and pay off the mortgage faster?

Once again, my thanks in advance

- Lucky

 

[Peter Parker]

A couple of questions:

- Does it cost to speak to a mortgage broker about lending?

No. But make sure you have bank statements and payslips when you see him/her.

- Is it a bad strategy to buy at start of a boom in a housing cycle? (like I think we are now, particularly in brisbane)

The start of the boom could be the very best time. But note that booms can only really be picked in hindsight.

- Right now, in a strong economy and mining boom - do you think I am better taking a variable or fixed rate of interest?

This is something to discuss with the broker. If you think that interest rates will go up and/or may have problems with servicing loans if repayments go up, go for fixed. Otherwise variable.

- Are shared mortgages with siblings encouraged if you know it helps you to borrow more and pay off the mortgage faster?

Combining money and families introduce a whole heap of risks, especially if you want to go off and do different things with the investment. Not really encouraged since relationships are more important than money.

If Brisbane is anything like Melbourne, under 200k could buy a cheap 1b apartment in an inner suburb, a 2br villa further out or a cheap 3br house in an older outer area. All built in the 1960s & 70s.

Peter

 

[Luckyrooster]

Thankyou for your detailed answers Peter.
When you spoke about Melbourne, what outer areas do you reccommend for a 3 bedroom house under 200k? I am not very knowledgable of any area outside Sydney to be overly honest. And I just don't see the same capital gains in an already high priced sydney market that I do in the other states right now.

Thanks again

Lucky

 

[alexlee]

On you job situation, LR, if you spend some time building good skill sets, you can combine both travel and making money. I've spent the last 6 years in London and Tokyo, enjoying life overseas while building my career (and making more money) as well.
Alex

 

[Luckyrooster]

Hey alexee, can I ask what you do for a profession?

I would be quite interested to find a job that allows regular international travel.

Regards,

LR

 

[alexlee]

Hey alexee, can I ask what you do for a profession?

I would be quite interested to find a job that allows regular international travel.

I'm an accountant. My job itself doesn't involve regular travel, but my skills are transferrable so I can quit, go overseas (in my case to London and Tokyo) and find a job there. I've spent the last 6 years living in London and Tokyo.

For example, many aussies go to the UK to work, anywhere from new grads to very experienced people. Visas are easy to get, and there is a great support network for overseas people going to the UK.

The biggest hurdle is the ACT of quitting your job in Oz and going overseas, without a job offer and not knowing what's going to happen. I can tell you it's worth it, though.
Alex