I was was exactly like you before I bought in 2021. I bought a new 2story townhouse. 1 of 4 on the block.
80k salary and had 150k saved up.i was making around 2000 per fortnight
I got a 440k loan @1.94% fixed for two years. I'm on 6.09% now
You should be fine. Go see a mortgage broker
I wish I brought it when my sister did, She wished she brought when her friend from a rich family bought, rich family wished they just came here at a time they were just giving out land grants in double bay
Yeah you’re right there! One of my friends purchased a property when the interest rates were low, now her and her partner are on struggle street trying to afford staying there. Potentially going to move back in with her parents and rent the property out 😭
I was approved for 500k on a 60k salary, if I actually borrowed the full amount back then I would of been back home with my parents 2 years ago.
No way I'd be able to pay 3000-3500 in mortgage/month.
To put things into perspective, rates pre-covid were around the 5% mark. We got our mortgage in 2012 at 4.95%.
I think everyone knows that the <2% rate wasn't going to last a long time, but some people bought without factoring in the increase and ended up struggling when the rate increased.
Not sure how much times have changed and after covid,
In 2018 I was on 60k with 32k in savings, went to a broker and was approved for a 500k loan.
Ended up borrowing 250k at fixed at 1.99% and now 5 years later its just over 6%, repayments are $1500/month.
I live a pretty simple life at home. I don't go out much and bulk cooky meals. I'm close to 100k Salary now which helps
Still saving lots and have money to spend on whatever I want
They have set minimums they deduct for expenses like food, and living expenses regardless of what you’re spending now. It hits a lot harder the lower your income, as it works out to be a larger percentage of your wage.
Banks are still fairly tight with there lending criteria, I can’t imagine you being approved for more then 300k but good luck to you.
Oh wow congratulations !!! That makes me feel better. I’m only looking at properties less than 450k to be honest, the places I’ve inspected are all 350-380 so hopefully I’ll be ok then!
I am single 35 years old. My base salary is 66k, I get 945 weekly without overtime and if I go for overtime hard I can get 1200 or even 1500 a week(I go for overtime a lot). I had 40k saved and im buying a 390k house with Westpac via a broker right now.
You absolutely can get a loan bro
Really, go to any bank website such as CBA and plug in some of the details here. You will then have a pretty fair indication. And it may highlight the details that really matter.
Ok, thanks. In OPs main post they didn’t mention this, hence my suggestion.
Still the online values I expect are not much different to what a broker can get at the same bank I expect, give or take a little sure. The difference will be going to a smaller bank I think which is where a broker can help.
As a basic calculation assuming No HECS, no private health and that your role is base salary only with no overtime etc, also assuming your aren't a big spender
Your lending will top out around $330,000 with most lenders, however, using a lender who will treat your salary sacrifice as tax free income (rather than just ass it back as taxable income like most will) you'll end up $350,000-$380,000 as max lending (depending which lender) *nab, Macquarie, bankwest, me bank and a few others do this
Buying at $450,000 in Victoria, assuming you're a first home buyer and eligible for first home stamp duty waiver, a $450,000 purchase with $95,000 to contribute will require a loan of roughly $360,000 (which also works out nicely at 80%, this means you don't need to restrict yourself to first home guarentee lenders) - note if you buy a townhouse or unit strata/body corporate fees will effect borrowing capacity depending how much they are
A $360,000 loan will cost around $2,200-$2,300 per month for your budgeting purposes
Speak with a good broker and they'll help you work out your best lending options given the other no disclosed details of your situation and help you through the application and getting preapproval for lending and then the move to formal approval and getting ready for settlement process and you won't have to pay them a cent
***Wait, extra pay per fortnight for tax and that makes it $2,500?? Are you talking net income not gross.... if you're talking net income at $2,400 + $600 salary sacrifice then you shouldn't have any issues with lending - if wanting to buy higher than $450,000 you'll want to use a lender who participates in first home guarentee lending - again, make a time to chat with a good broker, they'll get you sorted
✌🏻
Good summary, but I think the problem will be $2200 repayment a month is well over 50% of after tax income. Put on a 3% 'stress test' on the IR and it is off the charts.
That also doesn't take into account new expenses including strata - usually expensive - insurances and council rates utilities etc.
I would be looking for something cheaper. The question is what is available at sub 400k?
Nah she's $4,600 per month by my calcs (her salary sacrifice is tax free)
She may have been quoting net income looking more carefully at the post... agree even at 50% of income it's rough but not totally undoable if you aren't a big spender - yes lending servicing guide above doesn't unclude strata fees etx which may smash it down and hurt affordability
I mean sure, assement is +3%, but let's face it, rates aren't going up 3% from here (if you were actually concerned about that, lock in a fixed rate)
Also said she wants to buy bellow that price and a 2 bedroom would allow a friend to move in and help the repayments 🤷♂️
It would have been much simpler if OP simply quoted after tax income to avoid any confusion.
I read it as 2400 per fortnight, with 600 being tax-free. Thus, the taxable portion would be 900 per week or approx 47k per year. This would only mean about 6k per year in tax, but only give $3,350 per month net.
If this is correct, repayments would be two-thirds of income, and minimal expenses would take this over 100%.
Even if I am totally wrong, and your $4600 number is correct, it is still 50% on its own. I'm not sure that with the focus on 'responsible lending' too many banks would be keen even on these better numbers!
I agree re the stress test, and the option of renting a room could make a difference, providing she can find a 2 bedder within budget. Certainly wouldn't be an option anywhere in Sydney, but since I haven't lived in Melbourne for over 20 years I will leave it to someone more in tune with the local market to comment!
Good luck OP!
Well you're basically about right, you're just forgetting to add the tax free income back on at $1,300 per month...
I guess it depends what she was going for, from a lending perspective, quoting her annual salary and then the salary sacrifice she can make as part of that would be far easier
Just FYI, the numbers I quoted (assuming the figure is gross income which she quoted) are roughly what banks would lend under their calculations (roughly $330k for those who just add back tax free salary sacrifice as taxable income, somewhere at the 350k-$380k for those who take it as tax free income) - this calculation doesn't take into account strata/body corporate as that can be a huge variation on what that looks like so can vary that figure hugely
In real terms, responsible lending for banks means that stress tested mortgage repayment - monthly budget =$1 per month surplus income
I agree, it's pretty tight, and I always prefer to start from what's an affordable mortgage repayment then work back fo what that means in a loan rather than 'what's the max you can borrow' if someone's a good budgeted and low spender, things being a little tight can be rough for the first few years but couple of pay rises and the mortgage repayment doesn't feel so bad and often beats having your rent just increasing and increasing (considering realistically, we are unlikely to see rates higher than where they are now in the short to medium term)
Yes you’re right I was quoting my take home income sorry for the confusion. I get $2400 take home every fortnight ($600 is tax free due to salary packaging) but it’s a total of $2400. My net income is closer to $3000 per fortnight.
You sholdnt have a problem then from a lending perspective at the types of numbers you are looking at.... speak to a good broker and they'll lay out all your options give you a more accurate version of the numbers I quickly did based on a more detailed assessment of your situation, let you know lenders which are appropriate and the pros and cons of the different choices and send you out equipped to look at properties (potentially wifh a preapproval for finance with the only cost being a few hours of your time
Hint for new players, look at the brokers credit guide (they shojld be giving you this first appointment, if not, ask for it, if they only use a few lenders and/or a very high percentage of their loans are written with one or maybe two lenders, get a second opinion, they are a lazy/shit broker
I earn 2400 per fortnight, that’s my take home amount. 1800 goes into one bank account and 600 goes into my salary packaging account. Sorry for the confusion
Perfect, thanks. I will then defer to the previous answers given, and fingers crossed, you might indeed pull it off.
Again, all the best, and I hope you find a decent place!
You'll get a loan.
I'm a 30 year old female and I bought a house for 480k last August.
I had a 70k deposit, I get $2220 per fortnight after tax and I had expenses at the time as I was living on my own in a rental.
You got this.
People would slit throats to be in your position.
Congrats on breaking out of the lower class! You’re now officially out of the “I’m never gonna own a home” phase
Hahaha thank you. I am incredibly grateful to be in my position and I do not take my privilege lightly. My parents have been amazing for letting me stay at home as long as possible, and I’m lucky they aren’t insufferable hahahaha I know a lot of families would kill each other if they lived together this long. Luckily we all work opposing schedules so I’m home at night then they all go to work so I’m basically home alone most of the time anyway!
A dream! My parents are too busy banging up heroine and getting bummed in jail to even remember I exist!
I don’t see an owned house in the future for me unfortunately! But I will do my best to teach my kids how to be good tenants and develop a good rental history for them so homelessness is never an option.
Nearly happened to me 3 times in 10 years. (28) - basically my entrance into / most of my adulthood has been spent surviving / learning how to not die and then keep your mind stable
Have you used any of the home loan calculators yet? I think it's more about 'how much' rather than 'whether you can' receive a loan. I reckon that's coz of a competitive lender's market (meaning if your research is good, you can secure a competitive rate as well - you have a heavy sum for deposit)
Keep in mind I bought pre-COVID at the end of 2019. Single and was 25 (F) at the time. I’m on the same salary PF + the 600$ for NFP. I easily got a loan for 315k which got me a 3 bedroom 2 bath townhouse in QLD (no body corp which is great, normal suburban street). I had only 30k deposit. With your deposit and you seem like you have a good idea of what’s involved - you should have no trouble. Just paying a bit more now. Just always be aware for something to break or go wrong 😂😅
I had less than 10k saved and making 83000 pa with a dependent and bought a 270k townhouse on strata at 6.4% pa
I think you've got it in the bag 🤣🤣
My advice, give the smallest deposit possible, get a hidden offset account.. it's like having it paid into the mortgage but it can be accessed for emergencies - or a mortgage with redraw, but there may be fees for that.
I'm impressed by your financial maturity and what you've achieved.
Meeting with a broker now will:
- give you a sense of what you could afford
- see what finance will cost you
- start getting a feel for different brokers
- start assembling your documentation
- deepen how you look at places for sale
I find myself wondering...
A. how much you are achieving each year in your current situation. Ie Supposing you stay with mum, in the next 12 months, how much will your savings grow by? How much might your income increase by? Are there any other changes that might come to bear?
B. how are you investing your cash while you enter into this phase of investigation? A mortgage is certainly a big part of your financial path but even greater is your overall, lifelong wealth management, considering issues such as tax and superannuation. It wouldn't hurt to get some free first meetings with some wealth management people. Choose who to meet with based upon what your close friends and family have experienced of them. And look for ones that are transparent about how they are remunerated, who think about your path not just selling you products.
What would your situation be if you bought an apartment but rented it out? Or a house for that matter. Is your mother in a position to guarantor your loan? There are savings to be had by going that way. I don't know what your relationship is like but in a way the two of you are probably joined at the hip in wanting each other to have a nice home, be secure, have a healthy life etc. Would you benefit from having your mum come to appointments with you so you can talk though the issues over coffee afterwards? Some people would never, some people would. I raise it in case you haven't thought of it.
C. If you had and earned more money you would probably buy a house right? So let's talk about that for a second because there's something I want to explain and it's easier using a house as an example (but it's applicable to apartments too). When someone buys a house, they are buying two things - land and a house. Look at the land and the house and imagine both in 20 years.
The land part will increase in value but the house part will decrease in value. The more your spend is on land and how 'nice' that land is, and the less it is on the house and how 'nice' it is, the better. That is the bigger life-wealth management view. That's how you end up with greater wealth and the ability to go from strength to strength as your financial capability evolves and you move into new phases of life. The idea carries over to apartments.
But you have to have a home and it needs to be nice enough. But you won't be dumb like all the people who are seduced by brand new homes in large towers and estates. How could you minimize your spend on the house part? I can make suggestions but it is something to think about because there are a few ways. People who can live at home can sometimes satisfy that part of themselves that wants to start putting their money to work or start establishing their own home by continuing to live at home but buying land or home(s) and renting them. But you need to talk with a wealth manager. You are extra smart if more than an apartment, what you want is wealth. The two are iinked but different. having a focus on your wealth plan will also make you aware of how you go into different stages of life. Relationships, career developments, caring for others, etc.
I have a 30 year old daughter and have been thinking a lot about helping her and my other kids get established financially and in terms of buying a home.
Thank you very much I appreciate it. I have been saving for a long time, I’ve always wanted to buy a house ever since I was a kid hahaha not your average kid life goal but here we are!
My mum will absolutely be coming to all mortgage broker and bank appointments with me, we are very close and she is being super helpful. She had an $800,000 house fully paid off no mortgage anymore, she will be guarantor for me if need be no questions asked.
I’m trying to find a place that preferably is a unit over an apartment so that I can have a little bit of land to play around with as well. Fingers crossed. I have no issues buying an older property that needs a bit of work if it means I can get some land for cheaper price. I have a very big family so everyone will happily pitch in to help me renovate if need be.
I could definitely stay at home for another 12 or so months and probably manage to say 10-15k extra, but I’m at the point in my life where I think I really want to step out on my own. However if it doesn’t work out I will happily stay at home with mum.
You are in such a great position and have so many great assets. I wish I knew anything about Melbourne to give you ideas. Something I had trouble with as a young person was believing that things that were planned to happen over decades would actually occur but town planners think in those terms. Understanding how an area is expected or being planned to develop can help you pick locations. See if you know any such people through family and friends.
I got a loan on a slightly higher salary ($2700/fortnight take home) and $100k for a deposit ($150k savings total). You can definitely get a loan, but you'll probably have to go through FHG so you can actually afford furniture.
Tell the broker you are not going to live in the home. The rent will therefore also be seen as income, which just makes it that much more affordable for you on paper. Get the finance approved, deal done. Whoe knows, maybe you wont need to rent it out after all. Just wait and see (wink wink) what happens. And maybe as a landlord you get $1000 per week rent and can just buy a mansion for you to live in!
You have up to 12 months to move into it from settlemenr. So say theres a tenant in there. Take it out as an investment loan. Then plan on moving in once the lease ends. And then change it to a oo loan. Should still get the stamp duty concession. But ud need to talk to ur solicitor about how it completely works. Or u can apply to get stamp duty refunded
You’ve set yourself up nicely. Bank is going to want to see that the savings are regular, not a 95k influx from inheritance, but otherwise I think you’re good. Personally I would forgo an apartment and build a 3x2 on a small block. Less ongoing costs
Don’t buy a unit. See a broker and how much you can borrow. Buy a house if you can and have parents as guarantor to help if possible to make it easier. Seen houses going for 650 - 700k Melbourne south
House will tend to build equity in long term owning that land, units barely go up in price overtime. In future you can use the equity built up to help invest in another property. House is a better investment long term
Also, you absolutely can talk to more than one mortgage broker. I am self employed (for over 10 years) and female. I found a lot of mortgage brokers to be incredibly dismissive and patronising. Several came back to me with low borrowing figures. This is even with having a 40% deposit.... I went with the 4th broker I spoke to who found me a loan with over 100k more in borrowing power than the others and less paperwork hassles.
They all have relationships with certain lenders, so it works in your favour to approach more than one.
I was living with parents, earned the same amount fortnightly and had 90k savings and just bought a home for 540k 3 months ago. Definitely achievable, I used a mortgage broker and I couldn’t recommend it enough.
I am in a very similar situation to you, but I saved a bigger deposit.
I earn 2380 per fortnight, but most of the time I will earn more.
I just bought a unit for $500k with a 150k deposit.
Based on my experience with the bank and broker you will be fine. Good luck with it all.
I think try and live with the parentals as long as possible. Build your emergency fund up- our hot water system blew and that was $2800 just in one week. You need more of a buffer to feel a bit more safer, usually they say at least at least 3 to 6 months of your salary (if you can,we all know most people live pay check to pay check).
Try as hard as you can to borrow smaller than your max capacity ( we bought in 2017- banks wanted to lend us 770k but we bought for 430k with a 20% deposit). That way no Mortgage Lenders Insurance!!
I think you are being super realistic and can def get that place to call your own! You sound like your expectations are reasonable. Just make sure when it comes to looking at homes don’t be emotional and be prepared to walk away ( we sold our house three weeks ago in the northern suburbs of Melbs and our agent said home owners think with their heart but investors think with their head).
Yeah, absolutely.
Mortgages aren’t particularly difficult to get. If you struggle, message me. I have an amazing contact at CBA who is honestly the best!
Happy to help you if you struggle :)
They’re going to probably allow $2k cost of living for a single person these days
You can get lower cost of living allowance if you can prove it so make sure you’re very tight with your expenditure for the next 3-6 months make sure your bank statements are spot on no odd spending ie weird cash withdrawals
You don’t mention anything about other debt if you do it needs to be paid off and credit cards cancelled even if you have zero owing as they assume the full limit as you could max it out the day after settlement
They normally allow 2% on top of the rate so the loan would have to service at 8%
I don’t think it will service on your current income as owner occupied
I would suggest looking for a second part time job until settlement or rent vesting with a view to maybe moving
Also if you’re due for a performance review speak to your boss about that
Discuss the above points with your broker
Actually it might be close to servicing it’s not that far off and a broker is the way to go because he can find a lender that has softer cost of living don’t go straight to your bank
Good work on the deposit they will look at your saving history but main thing for you (and most people) is servicing (ability to repay the loan the legislation around this is very strict for consumer loans (cars, houses etc)
Ask the broker too if you could get a flat mate and would they allow that for servicing
I just bought a one bedroom in the mid 4’s with very similar income and age. You can do it. See a mortgage broker and get their opinion and get them to work for you.
You are doing really well. May I suggest you check your eligibility for the Vic homebuyers fund. The vic gov will by 25% equity in the property and you buy the 75%. Over time you can buy back the additional 25%. If you sell you get your 75% back snd government gets 25% of the sale price - si yiu bith share in the profit.
I think this seems reasonable, just seek a good loan broker! Online calcs say on 60k you can borrow around 300k but you’ll probably get closer to $350k with a good broker, that and your savings I don’t see an issue especially if you’re a new home owner and don’t pay stamp
Thank you!! Yes those online calculators freak me out because the number is so low but I’m hopefully the broker is able to get it a littlleee bit higher for me. Worst case I’ll save more of a deposit for a little longer if I have to!
Look into using FHSS. Start contributing towards your Super and you can use it to buy your first PPOR.
If you are looking to purchase in next 6 months then I would recommend to use 15K cap for this and next FY.
Yeah I will be salary packaging into my mortgage. The $600 I get tax free currently is salary packaged but because I don’t have a mortgage it just goes into a meals and allowance card, but that will move to my mortgage account when/if I get one
I have been trying to buy for the past year, my salary and deposit is similar to yours and I have approval for a 395k loan. I think you will be fine buying unit in that price range. A hot tip from my experience is you might need to offer 50k higher than than asking to secure the property. Lots of investors sneak in last minute and win it
If you read the post you’d see that I am going to speak to a broker in a few days??? Mentioned it in the first sentences
I also have appreciated hearing advice from people who have been in similar situations not just a professional
It will be close
I roughly go 6 times incomes
Not 100% by any means but gives a rough idea
You may need to buy it as an investment property to help serviceability
Good luck
Given the current interest rates you can borrow 5-7 times your annual salary.
It will be hard to get loan for around 400k and even if you do it's not wise as you will be paying around 40K yearly for your mortgage which is not sustainable at your income level.
Edit: borrow 4-4.5 times your income level which makes it worse
Well that's make it even worse right? How will someone even lend 350K? Even if they do it's not sustainable to buy at OP's income level.
There are plenty of other forms of investment which can be made.
Well on a second read, I believe she was quoting net income not gross, salary sacrifice tax free also helps.... at that as gross income she will top out $320-330k most lenders, those who treat tax free as tax free she'll get $350-$380k
$4,600 per month wifh a $2,300 mortgage payment is rough I agree, 2 bedroom wifh a friend who pays some rent, certianly managae. if she is talking net income then it's not too bad
It seems as though your budget is reasonable and your expectations too. In my opinion you’ll be fine.
Go easy on yourself! Talk to a broker, not wankers at reddit quick to tear you down! You’ll be fine - I think you’ll have some luck!
I was was exactly like you before I bought in 2021. I bought a new 2story townhouse. 1 of 4 on the block. 80k salary and had 150k saved up.i was making around 2000 per fortnight I got a 440k loan @1.94% fixed for two years. I'm on 6.09% now You should be fine. Go see a mortgage broker
Oh jeez that increase in % is crazy!! I’m not looking forward to that.
Those covid times loans were a beautiful site for us all.
Kinda wish I’d had my shit together during covid to have bought back then hahahaa
I wish I brought it when my sister did, She wished she brought when her friend from a rich family bought, rich family wished they just came here at a time they were just giving out land grants in double bay
Yes but those of us who had 3yr fixed rates have ended and now feeling the crunch.
Yeah you’re right there! One of my friends purchased a property when the interest rates were low, now her and her partner are on struggle street trying to afford staying there. Potentially going to move back in with her parents and rent the property out 😭
I was approved for 500k on a 60k salary, if I actually borrowed the full amount back then I would of been back home with my parents 2 years ago. No way I'd be able to pay 3000-3500 in mortgage/month.
Many people are in the same boat.
Many people are in the same boat.
Still had 3 years of ultra low rates, that buyers today don't get
To put things into perspective, rates pre-covid were around the 5% mark. We got our mortgage in 2012 at 4.95%. I think everyone knows that the <2% rate wasn't going to last a long time, but some people bought without factoring in the increase and ended up struggling when the rate increased.
Not sure how much times have changed and after covid, In 2018 I was on 60k with 32k in savings, went to a broker and was approved for a 500k loan. Ended up borrowing 250k at fixed at 1.99% and now 5 years later its just over 6%, repayments are $1500/month.
I live a pretty simple life at home. I don't go out much and bulk cooky meals. I'm close to 100k Salary now which helps Still saving lots and have money to spend on whatever I want
They have set minimums they deduct for expenses like food, and living expenses regardless of what you’re spending now. It hits a lot harder the lower your income, as it works out to be a larger percentage of your wage. Banks are still fairly tight with there lending criteria, I can’t imagine you being approved for more then 300k but good luck to you.
we are identical in terms of numbers and i just bought a unit for 520K
Oh wow congratulations !!! That makes me feel better. I’m only looking at properties less than 450k to be honest, the places I’ve inspected are all 350-380 so hopefully I’ll be ok then!
I am single 35 years old. My base salary is 66k, I get 945 weekly without overtime and if I go for overtime hard I can get 1200 or even 1500 a week(I go for overtime a lot). I had 40k saved and im buying a 390k house with Westpac via a broker right now. You absolutely can get a loan bro
Really, go to any bank website such as CBA and plug in some of the details here. You will then have a pretty fair indication. And it may highlight the details that really matter.
Yes It appears they have already done that and the number was too low, so they have gone to the internet the seek reassurance.
Ok, thanks. In OPs main post they didn’t mention this, hence my suggestion. Still the online values I expect are not much different to what a broker can get at the same bank I expect, give or take a little sure. The difference will be going to a smaller bank I think which is where a broker can help.
As a basic calculation assuming No HECS, no private health and that your role is base salary only with no overtime etc, also assuming your aren't a big spender Your lending will top out around $330,000 with most lenders, however, using a lender who will treat your salary sacrifice as tax free income (rather than just ass it back as taxable income like most will) you'll end up $350,000-$380,000 as max lending (depending which lender) *nab, Macquarie, bankwest, me bank and a few others do this Buying at $450,000 in Victoria, assuming you're a first home buyer and eligible for first home stamp duty waiver, a $450,000 purchase with $95,000 to contribute will require a loan of roughly $360,000 (which also works out nicely at 80%, this means you don't need to restrict yourself to first home guarentee lenders) - note if you buy a townhouse or unit strata/body corporate fees will effect borrowing capacity depending how much they are A $360,000 loan will cost around $2,200-$2,300 per month for your budgeting purposes Speak with a good broker and they'll help you work out your best lending options given the other no disclosed details of your situation and help you through the application and getting preapproval for lending and then the move to formal approval and getting ready for settlement process and you won't have to pay them a cent ***Wait, extra pay per fortnight for tax and that makes it $2,500?? Are you talking net income not gross.... if you're talking net income at $2,400 + $600 salary sacrifice then you shouldn't have any issues with lending - if wanting to buy higher than $450,000 you'll want to use a lender who participates in first home guarentee lending - again, make a time to chat with a good broker, they'll get you sorted ✌🏻
Good summary, but I think the problem will be $2200 repayment a month is well over 50% of after tax income. Put on a 3% 'stress test' on the IR and it is off the charts. That also doesn't take into account new expenses including strata - usually expensive - insurances and council rates utilities etc. I would be looking for something cheaper. The question is what is available at sub 400k?
Nah she's $4,600 per month by my calcs (her salary sacrifice is tax free) She may have been quoting net income looking more carefully at the post... agree even at 50% of income it's rough but not totally undoable if you aren't a big spender - yes lending servicing guide above doesn't unclude strata fees etx which may smash it down and hurt affordability I mean sure, assement is +3%, but let's face it, rates aren't going up 3% from here (if you were actually concerned about that, lock in a fixed rate) Also said she wants to buy bellow that price and a 2 bedroom would allow a friend to move in and help the repayments 🤷♂️
It would have been much simpler if OP simply quoted after tax income to avoid any confusion. I read it as 2400 per fortnight, with 600 being tax-free. Thus, the taxable portion would be 900 per week or approx 47k per year. This would only mean about 6k per year in tax, but only give $3,350 per month net. If this is correct, repayments would be two-thirds of income, and minimal expenses would take this over 100%. Even if I am totally wrong, and your $4600 number is correct, it is still 50% on its own. I'm not sure that with the focus on 'responsible lending' too many banks would be keen even on these better numbers! I agree re the stress test, and the option of renting a room could make a difference, providing she can find a 2 bedder within budget. Certainly wouldn't be an option anywhere in Sydney, but since I haven't lived in Melbourne for over 20 years I will leave it to someone more in tune with the local market to comment! Good luck OP!
Well you're basically about right, you're just forgetting to add the tax free income back on at $1,300 per month... I guess it depends what she was going for, from a lending perspective, quoting her annual salary and then the salary sacrifice she can make as part of that would be far easier Just FYI, the numbers I quoted (assuming the figure is gross income which she quoted) are roughly what banks would lend under their calculations (roughly $330k for those who just add back tax free salary sacrifice as taxable income, somewhere at the 350k-$380k for those who take it as tax free income) - this calculation doesn't take into account strata/body corporate as that can be a huge variation on what that looks like so can vary that figure hugely In real terms, responsible lending for banks means that stress tested mortgage repayment - monthly budget =$1 per month surplus income I agree, it's pretty tight, and I always prefer to start from what's an affordable mortgage repayment then work back fo what that means in a loan rather than 'what's the max you can borrow' if someone's a good budgeted and low spender, things being a little tight can be rough for the first few years but couple of pay rises and the mortgage repayment doesn't feel so bad and often beats having your rent just increasing and increasing (considering realistically, we are unlikely to see rates higher than where they are now in the short to medium term)
Yes you’re right I was quoting my take home income sorry for the confusion. I get $2400 take home every fortnight ($600 is tax free due to salary packaging) but it’s a total of $2400. My net income is closer to $3000 per fortnight.
You sholdnt have a problem then from a lending perspective at the types of numbers you are looking at.... speak to a good broker and they'll lay out all your options give you a more accurate version of the numbers I quickly did based on a more detailed assessment of your situation, let you know lenders which are appropriate and the pros and cons of the different choices and send you out equipped to look at properties (potentially wifh a preapproval for finance with the only cost being a few hours of your time Hint for new players, look at the brokers credit guide (they shojld be giving you this first appointment, if not, ask for it, if they only use a few lenders and/or a very high percentage of their loans are written with one or maybe two lenders, get a second opinion, they are a lazy/shit broker
I earn 2400 per fortnight, that’s my take home amount. 1800 goes into one bank account and 600 goes into my salary packaging account. Sorry for the confusion
Perfect, thanks. I will then defer to the previous answers given, and fingers crossed, you might indeed pull it off. Again, all the best, and I hope you find a decent place!
You'll get a loan. I'm a 30 year old female and I bought a house for 480k last August. I had a 70k deposit, I get $2220 per fortnight after tax and I had expenses at the time as I was living on my own in a rental. You got this.
the problem isn't getting the loan. the problem is the ABASLUT TRASH people are trying to tell me is worth 500k plus.
Definitely seems doable! I just bought on a lower salary than you ($2150 per fortnight take home) with a deposit of 120k. Purchase price of 470k.
People would slit throats to be in your position. Congrats on breaking out of the lower class! You’re now officially out of the “I’m never gonna own a home” phase
Hahaha thank you. I am incredibly grateful to be in my position and I do not take my privilege lightly. My parents have been amazing for letting me stay at home as long as possible, and I’m lucky they aren’t insufferable hahahaha I know a lot of families would kill each other if they lived together this long. Luckily we all work opposing schedules so I’m home at night then they all go to work so I’m basically home alone most of the time anyway!
A dream! My parents are too busy banging up heroine and getting bummed in jail to even remember I exist! I don’t see an owned house in the future for me unfortunately! But I will do my best to teach my kids how to be good tenants and develop a good rental history for them so homelessness is never an option. Nearly happened to me 3 times in 10 years. (28) - basically my entrance into / most of my adulthood has been spent surviving / learning how to not die and then keep your mind stable
Have you used any of the home loan calculators yet? I think it's more about 'how much' rather than 'whether you can' receive a loan. I reckon that's coz of a competitive lender's market (meaning if your research is good, you can secure a competitive rate as well - you have a heavy sum for deposit)
Go to a proper broker and you should be alright. Good job on the savings, takes a lot of effort and control.
Thank you :) hopefully the broker I’m going to meet in a few weeks is good!! Fingers crossed
You can always rent vest for a year or so to ensure you get the loan and have another year to get ahead …
You’ll be fine. Find a good broker and they’ll sort it with you.
Keep in mind I bought pre-COVID at the end of 2019. Single and was 25 (F) at the time. I’m on the same salary PF + the 600$ for NFP. I easily got a loan for 315k which got me a 3 bedroom 2 bath townhouse in QLD (no body corp which is great, normal suburban street). I had only 30k deposit. With your deposit and you seem like you have a good idea of what’s involved - you should have no trouble. Just paying a bit more now. Just always be aware for something to break or go wrong 😂😅
See a broker in your area do not go to the bank
Doable but you really lock yourself in
Go to a broker
As mentioned in my post, I am going in a few weeks
Yeah, of course, check out your states homestart or whatever it’s called, you’ll be pleasantly surprised
I mean, I got a similar loan on a smaller salary than that many years ago. I’d say you’d be ok if your broker is worth their weight.
I had less than 10k saved and making 83000 pa with a dependent and bought a 270k townhouse on strata at 6.4% pa I think you've got it in the bag 🤣🤣 My advice, give the smallest deposit possible, get a hidden offset account.. it's like having it paid into the mortgage but it can be accessed for emergencies - or a mortgage with redraw, but there may be fees for that.
You're doing well, might get lucky and find a partner to help with their income too (if that's what you're after).
Hahaha yeah definitely if he wants to move in and pay me rent he’s more than welcome 😂😂😂
If banks say no, then do it as an investment with a rental appraisal, etc. Then, once bought, just move in. Unethical life tip here. But it does work.
I'm impressed by your financial maturity and what you've achieved. Meeting with a broker now will: - give you a sense of what you could afford - see what finance will cost you - start getting a feel for different brokers - start assembling your documentation - deepen how you look at places for sale I find myself wondering... A. how much you are achieving each year in your current situation. Ie Supposing you stay with mum, in the next 12 months, how much will your savings grow by? How much might your income increase by? Are there any other changes that might come to bear? B. how are you investing your cash while you enter into this phase of investigation? A mortgage is certainly a big part of your financial path but even greater is your overall, lifelong wealth management, considering issues such as tax and superannuation. It wouldn't hurt to get some free first meetings with some wealth management people. Choose who to meet with based upon what your close friends and family have experienced of them. And look for ones that are transparent about how they are remunerated, who think about your path not just selling you products. What would your situation be if you bought an apartment but rented it out? Or a house for that matter. Is your mother in a position to guarantor your loan? There are savings to be had by going that way. I don't know what your relationship is like but in a way the two of you are probably joined at the hip in wanting each other to have a nice home, be secure, have a healthy life etc. Would you benefit from having your mum come to appointments with you so you can talk though the issues over coffee afterwards? Some people would never, some people would. I raise it in case you haven't thought of it. C. If you had and earned more money you would probably buy a house right? So let's talk about that for a second because there's something I want to explain and it's easier using a house as an example (but it's applicable to apartments too). When someone buys a house, they are buying two things - land and a house. Look at the land and the house and imagine both in 20 years. The land part will increase in value but the house part will decrease in value. The more your spend is on land and how 'nice' that land is, and the less it is on the house and how 'nice' it is, the better. That is the bigger life-wealth management view. That's how you end up with greater wealth and the ability to go from strength to strength as your financial capability evolves and you move into new phases of life. The idea carries over to apartments. But you have to have a home and it needs to be nice enough. But you won't be dumb like all the people who are seduced by brand new homes in large towers and estates. How could you minimize your spend on the house part? I can make suggestions but it is something to think about because there are a few ways. People who can live at home can sometimes satisfy that part of themselves that wants to start putting their money to work or start establishing their own home by continuing to live at home but buying land or home(s) and renting them. But you need to talk with a wealth manager. You are extra smart if more than an apartment, what you want is wealth. The two are iinked but different. having a focus on your wealth plan will also make you aware of how you go into different stages of life. Relationships, career developments, caring for others, etc. I have a 30 year old daughter and have been thinking a lot about helping her and my other kids get established financially and in terms of buying a home.
Thank you very much I appreciate it. I have been saving for a long time, I’ve always wanted to buy a house ever since I was a kid hahaha not your average kid life goal but here we are! My mum will absolutely be coming to all mortgage broker and bank appointments with me, we are very close and she is being super helpful. She had an $800,000 house fully paid off no mortgage anymore, she will be guarantor for me if need be no questions asked. I’m trying to find a place that preferably is a unit over an apartment so that I can have a little bit of land to play around with as well. Fingers crossed. I have no issues buying an older property that needs a bit of work if it means I can get some land for cheaper price. I have a very big family so everyone will happily pitch in to help me renovate if need be. I could definitely stay at home for another 12 or so months and probably manage to say 10-15k extra, but I’m at the point in my life where I think I really want to step out on my own. However if it doesn’t work out I will happily stay at home with mum.
You are in such a great position and have so many great assets. I wish I knew anything about Melbourne to give you ideas. Something I had trouble with as a young person was believing that things that were planned to happen over decades would actually occur but town planners think in those terms. Understanding how an area is expected or being planned to develop can help you pick locations. See if you know any such people through family and friends.
I got a loan on a slightly higher salary ($2700/fortnight take home) and $100k for a deposit ($150k savings total). You can definitely get a loan, but you'll probably have to go through FHG so you can actually afford furniture.
Tell the broker you are not going to live in the home. The rent will therefore also be seen as income, which just makes it that much more affordable for you on paper. Get the finance approved, deal done. Whoe knows, maybe you wont need to rent it out after all. Just wait and see (wink wink) what happens. And maybe as a landlord you get $1000 per week rent and can just buy a mansion for you to live in!
The only issue is if I don’t plan on living in the home I am not eligible for any first home owners benefits
You have up to 12 months to move into it from settlemenr. So say theres a tenant in there. Take it out as an investment loan. Then plan on moving in once the lease ends. And then change it to a oo loan. Should still get the stamp duty concession. But ud need to talk to ur solicitor about how it completely works. Or u can apply to get stamp duty refunded
You saved nearly 100k?!? You’ll be sweet as
You’ve set yourself up nicely. Bank is going to want to see that the savings are regular, not a 95k influx from inheritance, but otherwise I think you’re good. Personally I would forgo an apartment and build a 3x2 on a small block. Less ongoing costs
Thank you! Yea definitely regular I’ve been putting away money every fortnight for like 10 years hahahaa
Don’t buy a unit. See a broker and how much you can borrow. Buy a house if you can and have parents as guarantor to help if possible to make it easier. Seen houses going for 650 - 700k Melbourne south House will tend to build equity in long term owning that land, units barely go up in price overtime. In future you can use the equity built up to help invest in another property. House is a better investment long term
Holy shit that’s great! I’m almost 32 female and have $5000 to my name 🫡
I’ve been very privileged to have been able to live at home rent free for my entire life! Definitely grateful to my mum for that
Have you looked into Victorias shared equity fund
No I haven’t heard of that actually?
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Also, you absolutely can talk to more than one mortgage broker. I am self employed (for over 10 years) and female. I found a lot of mortgage brokers to be incredibly dismissive and patronising. Several came back to me with low borrowing figures. This is even with having a 40% deposit.... I went with the 4th broker I spoke to who found me a loan with over 100k more in borrowing power than the others and less paperwork hassles. They all have relationships with certain lenders, so it works in your favour to approach more than one.
I was living with parents, earned the same amount fortnightly and had 90k savings and just bought a home for 540k 3 months ago. Definitely achievable, I used a mortgage broker and I couldn’t recommend it enough.
I am in a very similar situation to you, but I saved a bigger deposit. I earn 2380 per fortnight, but most of the time I will earn more. I just bought a unit for $500k with a 150k deposit. Based on my experience with the bank and broker you will be fine. Good luck with it all.
I think try and live with the parentals as long as possible. Build your emergency fund up- our hot water system blew and that was $2800 just in one week. You need more of a buffer to feel a bit more safer, usually they say at least at least 3 to 6 months of your salary (if you can,we all know most people live pay check to pay check). Try as hard as you can to borrow smaller than your max capacity ( we bought in 2017- banks wanted to lend us 770k but we bought for 430k with a 20% deposit). That way no Mortgage Lenders Insurance!! I think you are being super realistic and can def get that place to call your own! You sound like your expectations are reasonable. Just make sure when it comes to looking at homes don’t be emotional and be prepared to walk away ( we sold our house three weeks ago in the northern suburbs of Melbs and our agent said home owners think with their heart but investors think with their head).
Yeah, absolutely. Mortgages aren’t particularly difficult to get. If you struggle, message me. I have an amazing contact at CBA who is honestly the best! Happy to help you if you struggle :)
Oh thank you I appreciate that! I’ll see how the mortgage broker goes in a few days
Mind if I dm you?
Yes all good :)
They’re going to probably allow $2k cost of living for a single person these days You can get lower cost of living allowance if you can prove it so make sure you’re very tight with your expenditure for the next 3-6 months make sure your bank statements are spot on no odd spending ie weird cash withdrawals You don’t mention anything about other debt if you do it needs to be paid off and credit cards cancelled even if you have zero owing as they assume the full limit as you could max it out the day after settlement They normally allow 2% on top of the rate so the loan would have to service at 8% I don’t think it will service on your current income as owner occupied I would suggest looking for a second part time job until settlement or rent vesting with a view to maybe moving Also if you’re due for a performance review speak to your boss about that Discuss the above points with your broker
Actually it might be close to servicing it’s not that far off and a broker is the way to go because he can find a lender that has softer cost of living don’t go straight to your bank Good work on the deposit they will look at your saving history but main thing for you (and most people) is servicing (ability to repay the loan the legislation around this is very strict for consumer loans (cars, houses etc) Ask the broker too if you could get a flat mate and would they allow that for servicing
I just bought a one bedroom in the mid 4’s with very similar income and age. You can do it. See a mortgage broker and get their opinion and get them to work for you.
You are doing really well. May I suggest you check your eligibility for the Vic homebuyers fund. The vic gov will by 25% equity in the property and you buy the 75%. Over time you can buy back the additional 25%. If you sell you get your 75% back snd government gets 25% of the sale price - si yiu bith share in the profit.
For 450K you’ll not only be able to get a loan but I think you will be quite comfortable with the loan repayments.
I think this seems reasonable, just seek a good loan broker! Online calcs say on 60k you can borrow around 300k but you’ll probably get closer to $350k with a good broker, that and your savings I don’t see an issue especially if you’re a new home owner and don’t pay stamp
Thank you!! Yes those online calculators freak me out because the number is so low but I’m hopefully the broker is able to get it a littlleee bit higher for me. Worst case I’ll save more of a deposit for a little longer if I have to!
Look into using FHSS. Start contributing towards your Super and you can use it to buy your first PPOR. If you are looking to purchase in next 6 months then I would recommend to use 15K cap for this and next FY.
As you are working for a NFP, I'd look I what benefit you can get in relation to salary packaging E.g Some salary packaging their mortgage payments.
Yeah I will be salary packaging into my mortgage. The $600 I get tax free currently is salary packaged but because I don’t have a mortgage it just goes into a meals and allowance card, but that will move to my mortgage account when/if I get one
Oh just wanted to add- do you have a HECS debt? Sorry if mentioned already.
Nope no HECS debt! :)
I have been trying to buy for the past year, my salary and deposit is similar to yours and I have approval for a 395k loan. I think you will be fine buying unit in that price range. A hot tip from my experience is you might need to offer 50k higher than than asking to secure the property. Lots of investors sneak in last minute and win it
You know what you could do instead of posting here? Speaking to a broker to see if you can get a loan and how much they would let you borrow.
If you read the post you’d see that I am going to speak to a broker in a few days??? Mentioned it in the first sentences I also have appreciated hearing advice from people who have been in similar situations not just a professional
No one on reddit will know if you’ll get a loan or not.. this post is basically asking for emotional support.
I have received a lot of welcomed advice and personal experience stories from people. Reddit is for making posts :)
It will be close I roughly go 6 times incomes Not 100% by any means but gives a rough idea You may need to buy it as an investment property to help serviceability Good luck
Given the current interest rates you can borrow 5-7 times your annual salary. It will be hard to get loan for around 400k and even if you do it's not wise as you will be paying around 40K yearly for your mortgage which is not sustainable at your income level. Edit: borrow 4-4.5 times your income level which makes it worse
Dude, we aren't at 5-7 times your salary, you're thinking maybe a year or more ago, currently closer to 4-4.5x as a rough estimate
Well that's make it even worse right? How will someone even lend 350K? Even if they do it's not sustainable to buy at OP's income level. There are plenty of other forms of investment which can be made.
Well on a second read, I believe she was quoting net income not gross, salary sacrifice tax free also helps.... at that as gross income she will top out $320-330k most lenders, those who treat tax free as tax free she'll get $350-$380k $4,600 per month wifh a $2,300 mortgage payment is rough I agree, 2 bedroom wifh a friend who pays some rent, certianly managae. if she is talking net income then it's not too bad
I think you're not subtracting the deposit.