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mwjw

Can we buy/build with hardly and deposit????

23 posts in this topic

Evening all!!

 

The wife and i have been looking at buying/building..as were getting closer to applyin for pr..at last!!!

 

Small problem..we have little or no deposit, starting to worry we can never get a house?

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If you do not have the full deposit you have to pay an insurance this is to cover the lender if you do not repay the loan. Some people put this onto the mortgage. This then will be paid over the term of the loan. I think the ins cost is based on the mortgage ammount. For example $400k mortgage with $20k deposit ins premium roughly $15k but dont quote me on that. Your best bet is to have a regular savings plan per week or month let this run for 4/6 months then speak with your bank/s.

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Well there are certain schemes like key start in which you don't need 5% but there are other criteria.

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Builders & banks getting desperate, a lot of builders advertising you can own your own home from $2-3000, and from personal experiance its true, the banks have a system in place called LMI, its Lenders Mortgage Insurance, it insures your risk with the bank, so basically the cost of the insurance policy is loaded on your mortgage, my LMI cost me $30k, the banks have an equation to work out minimum deposit, so the answer is yes, you can build a house with little or no cash, buying an existing house is another story, you are better off building, I could build, but couldnt buy an an existing house

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Hey, cheers for the info. Want to buy old, but looks impossible. Cant believe banks aren't more flexible!

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Hey, cheers for the info. Want to buy old, but looks impossible. Cant believe banks aren't more flexible!

Hi, we bought an old house last year, and hardly had any deposit, 5% in fact, and the LMI was loaded onto our mortgage. I can PM you the bank, not sure if I am allowed to state it on here? It's one of the big ones. Two other big ones didn't want to know us, including one we actually bank with.

Building was of no interest to us, we wanted a big old house to renovate, and the bank helped us with that dream.

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Hi, we bought an old house last year, and hardly had any deposit, 5% in fact, and the LMI was loaded onto our mortgage. I can PM you the bank, not sure if I am allowed to state it on here? It's one of the big ones. Two other big ones didn't want to know us, including one we actually bank with.

Building was of no interest to us, we wanted a big old house to renovate, and the bank helped us with that dream.

 

Hi @Raychelsb sorry for hijack on post @mwjw ….. But could you pm me name of your bank - a we are havin a mare with ours !! Thankyou :o)

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We talked to Aussie, the mortgage brokers, we liked the look of a house that was on the market for $500k, the meeting lasted about 5 mins, her opening statement was "we needed $55k in cash" before we could proceed, some of this was for the stamp duty, needless to say we walked away, good job really, as a year later we moved NOR, still renting but loved it and ended up building in the same suburb, so much easier on the bank balance, some of the builders even offered to pay our rent while we were building, obviously in the year or so leading up to this we saved liked mad and a month after getting our keys off the builder we sold our UK house, which made life a whole lot easier

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We talked to Aussie, the mortgage brokers, we liked the look of a house that was on the market for $500k, the meeting lasted about 5 mins, her opening statement was "we needed $55k in cash" before we could proceed, some of this was for the stamp duty, needless to say we walked away, good job really, as a year later we moved NOR, still renting but loved it and ended up building in the same suburb, so much easier on the bank balance, some of the builders even offered to pay our rent while we were building, obviously in the year or so leading up to this we saved liked mad and a month after getting our keys off the builder we sold our UK house, which made life a whole lot easier

 

Sounds Fab @Druid ! Are you in Joondalup ? if so whats it like as a place to live ?

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Sounds Fab @Druid ! Are you in Joondalup ? if so whats it like as a place to live ?

 

Hi Pegg, We in Burns Beach, not far from you in Mullaloo, we love it, everything (Except Work) is 5 mins from the house, we can walk to Currambine Stn and go for a night out in Joondalup City or Perth City, on sundays we try not to get into the car, just walk to the beach with the dogs and have a relaxing doggy day

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Fantastic @Druid …. just wondered if there was a cafe strip or town centre ( apart fro lakeside ) in Joondalup - as always seems a little artificial , saying that i work at the hospital there - so need to explore i guess :o)

 

also i had a coffee at cafe in burns beach ………. Hot weekend forecast - so enjoy the beach :o)

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Fantastic @Druid …. just wondered if there was a cafe strip or town centre ( apart fro lakeside ) in Joondalup - as always seems a little artificial , saying that i work at the hospital there - so need to explore i guess :o)

 

also i had a coffee at cafe in burns beach ………. Hot weekend forecast - so enjoy the beach :o)

 

Burns Beach Cafe is over rated & expensive.

 

Joondalup has Central walk starting by you at the hospital with The Buttary Cafe, which does an awsome breakfast by the way, then goes past Paddy Malones pub on past various pubs & resturant, eventually ends at Kulture Chinese Resturant which is also good food & cheap beer, between the buttary and Paddys is a bit sparse, but from Paddys to Kulture there is lots including Down the Hatch, Joondalup have some Hawkers Twilight Markets starting soon, normally worth a look & a night out

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We talked to Aussie, the mortgage brokers, we liked the look of a house that was on the market for $500k, the meeting lasted about 5 mins, her opening statement was "we needed $55k in cash" before we could proceed, some of this was for the stamp duty, needless to say we walked away, good job really, as a year later we moved NOR, still renting but loved it and ended up building in the same suburb, so much easier on the bank balance, some of the builders even offered to pay our rent while we were building, obviously in the year or so leading up to this we saved liked mad and a month after getting our keys off the builder we sold our UK house, which made life a whole lot easier

 

Hi, this is really interesting, after about a year or so we think we would like to build, we think we will be NOR, whereabouts did you build, and what builder did you use, did you get one of those house and land packages I've seen or can you buy land and then commission an architect and builder separately? Did the builders pay your rent wile you built and do you qualify for the first home owners grant if you build?

 

Some of the online ads I've seen seem too good to be true - triple the home owners grant and paying rent while they build, cant believe there are no catches, it sounds too easy or is that the cynic in me?

 

Sorry for all the questions, just trying to get an idea of whether it's a viable option.

 

Thanks

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Sorry for hijacking your thread mwjw, Hi Jen78, my information is a couple of years old now as we have been in our new house for just over a year and it took about a year to build, we built in Burns Beach with Ben Trager Homes and no they didnt pay our rent but we did qualify for the $10k first home owners grant, before we headed up north we lived in Harrisdale SOR (Canningvale area)for a couple of years, we almost signed up with Ross North Homes and built in Piara Waters up the road from Harrisdale, at the time we qualified for a Key Start mortgage and we were going down the house & land package route, problem is at the time the Key Start mortgage had a cap of $475k and it was difficult getting a house design suitable for 4 adults (my kids are big) and a piece of land big enough to take it for $475k, there were too many compromises, with the Key Start, you pay a marginally higher interest rate, but remember its only for two years, then you can change banks & change mortgage, you only have to put $2k down as a deposit, but that in itself is a problem, they wont let you pay more in, for example, the cap is $475k, if your house & land package came in at $500k, you couldnt pay in the extra $25k to get what you want and $475k in Perth doesnt buy you much, if you are single or a young couple its fine. While you are building with Key Start they dont pay your rent as such, but you only have tp pay $50 week into your mortgage, another thing with Key Start is the new house has to be 'Habitable' meaning it has to have floor coverings, decorated and blinds etc, which again eats into your $475k, and the 'Builders Choice' range of finishers is not great, you can do things like have no airconditioning which will save you $6k, but they charge you $6k to decorate the house, and after you move in you can use your own money to have aircon fitted, we had some friends who built SOR with Key Start they got entered into 'Land Lottery', basically a bunch of land building blocks in one particular estate were put in a lottery, your name was drawn out of a hat and you got that block, so you didnt have a choice what block you want, this wasnt mentioned when I was negotiating with Ross North.

 

As for the idea of buying your block of land a commisioning an architect, this is common, but you have to have lots of money, its expensive, architects charge a fortune over here, and then you are still stuck with trying to get a builder to build you architect designed home for a fixed price, all building contracts are governed by HIA, so the contact has to be a fixed price, trying to nail a builder down to a fixed price will be a nightmare, they will double the price just to cover their arse, all the house building companies have a mirriad of different designs, so pick a basic design you like, then change it to suit you, much cheaper than going down the bespoke route, we bought our land seperately but then signed up with a builder in quick succession and put it through the bank as a house & land package, you save a couple of thousand bucks in stamp duty if you do it that way, we were on an extremely tight budget so didnt change our house much, SOR we were looking at house & land packages for $500k, here in Burns Beach we ended up paying $400k just for the land we could have gone 7km further up the coast to Clarkson and built for $500k, but we decided we came to Australia for the beach lifestyle, and Burns Beach fitted that description, we knew once we sold our UK house it would all come right, and it did......................

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House and land packages are a bit of a myth. There just a marketing tool by builders. All the builders do, is the sales guys poor over land blocks and look at which of their houses will fit on it and call it a package. But, the process of buying, mortgage and building are the same as you just finding a block and selecting a house.

 

We built with a builder that offered a turn key package. So, everything was included such as painting, flooring and things. The advantage was that we knew it would all be done and came under the builders warranty. We were very happy with the result.

 

What you do need to be VERY aware of is that the price the builders initially quote wont be the final price. You need to allow for essential upgrades. For example, the initial price will only include a basic electrical package which is 1 socket per room. Now obviously you cant run a house on that, so, when you attend the pre start meeting, you go through every aspect of the build and decide on what upgrades you need. We actually didn't need very much other than the electrical and a few small bits, but still spent about 10k on the day - which you pay for there and then.

 

You also need to consider other costs. For example landscaping. This can be VERY expensive. I am convinced that turf growers in WA most be growing it in compost derived from unicorn poo and with solid gold gardening tools used as that can be the only justification of prices. Also, check things like conditions in the land title unique to the area. For example, our area required that party walls separating our garden from neighbors were made of limestone blocks - colour bond fencing is banned. That cost another 20k.

 

On the mortgage front, the build side is separate from the land side and so while the house is being built, the builders will draw down the mortgage at fixed stages. So, you are not paying the full mortgage until the very end when you get the keys. I think ours was something like 10% on completion of laying slab, 10% on plate hight, 20% on the house being sealed with doors, windows and roof and the rest on completion.

 

There is an excellent thread that a few of us wrote while we were building http://www.perthpoms.com/forum/renting-real-estate/15595-house-building-queries-open-thread.html

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Brilliant post VS... my daughter and my SIL were building at the time you were, and they totally agree with all you say. They have been in their house for just over a year now and hoping that as their garden is taking shape, that they can change their mortgage provider so they are not paying so much over the top for what they have. They do though appreciate that without this scheme, they would not have been able to purchase a new home.... swings and roundabouts I guess.

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Unicorn poo! Love it! There's coastal charges and bushfire threat charges now as well to factor in. I guess that would come back with the survey.

 

House and land packages are a bit of a myth. There just a marketing tool by builders. All the builders do, is the sales guys poor over land blocks and look at which of their houses will fit on it and call it a package. But, the process of buying, mortgage and building are the same as you just finding a block and selecting a house.

 

We built with a builder that offered a turn key package. So, everything was included such as painting, flooring and things. The advantage was that we knew it would all be done and came under the builders warranty. We were very happy with the result.

 

What you do need to be VERY aware of is that the price the builders initially quote wont be the final price. You need to allow for essential upgrades. For example, the initial price will only include a basic electrical package which is 1 socket per room. Now obviously you cant run a house on that, so, when you attend the pre start meeting, you go through every aspect of the build and decide on what upgrades you need. We actually didn't need very much other than the electrical and a few small bits, but still spent about 10k on the day - which you pay for there and then.

 

You also need to consider other costs. For example landscaping. This can be VERY expensive. I am convinced that turf growers in WA most be growing it in compost derived from unicorn poo and with solid gold gardening tools used as that can be the only justification of prices. Also, check things like conditions in the land title unique to the area. For example, our area required that party walls separating our garden from neighbors were made of limestone blocks - colour bond fencing is banned. That cost another 20k.

 

On the mortgage front, the build side is separate from the land side and so while the house is being built, the builders will draw down the mortgage at fixed stages. So, you are not paying the full mortgage until the very end when you get the keys. I think ours was something like 10% on completion of laying slab, 10% on plate hight, 20% on the house being sealed with doors, windows and roof and the rest on completion.

 

There is an excellent thread that a few of us wrote while we were building http://www.perthpoms.com/forum/renting-real-estate/15595-house-building-queries-open-thread.html

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Remember you have to 'Qualify' for the Key Start mortgage, at the time of my enquiries I was earning under the threshold, the wife had just got her job and was on probation so her wage didnt count, once her probation was up we no longer qualified, we had to sign up before her probation was up, we didnt, we walked away, so we had to give up until we had saved the deposit, still a lot less of a deposit needed to build rather than buy established, we also had to pay rent & pay interest only on any mortgage the bank had released for the land and builder stage payments.

 

Most of the big land developers, Peet Satterley etc, include a fencing & front landscaping package, colorbond fencing was erected FOC and we had a $6k voucher to spend with Landscape Australia, more than enough for what we needed including retic.

 

As we were on a tight budget we had to restrain ourselves in pre-start, a few electrical upgrades, a basic smart wiring package & a few extra kitchen cupboards, still came to $20k, but then we got the first home owners $10k.

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We talked to Aussie, the mortgage brokers, we liked the look of a house that was on the market for $500k, the meeting lasted about 5 mins, her opening statement was "we needed $55k in cash" before we could proceed, some of this was for the stamp duty, needless to say we walked away, good job really, as a year later we moved NOR, still renting but loved it and ended up building in the same suburb, so much easier on the bank balance, some of the builders even offered to pay our rent while we were building, obviously in the year or so leading up to this we saved liked mad and a month after getting our keys off the builder we sold our UK house, which made life a whole lot easier

Hi Druid

 

You can get away with 2 % deposit. You can use your first home owner grant ($10,000) as part for that deposit. So, you only really need 1% deposit, which will need to be in your account for a minimum of 3 months.

 

Conditions on the above are

Property you are looking to build is under $480,000

You do not exceed/go over income restrictions $75,000 (Singles), $95,000 (Couples) and $115,000 (Families)

 

Also with the above lender there is no Lenders Mortgage Insurance.

 

Second option of low deposit is 5 % deposit.

 

You will need 3 % (which will need to be in your account for a minimum of 3 months) and you can use your first home owner grant ($10,000) as part for that deposit to make up 5%.

 

You will pay Lenders Mortgage Insurance but you will get better rate and more borrowing capacity, with no restrictions on income.

 

The above scenarios are for building and not established. Also, it is for first home buyers in Australia. Must be PR etc.

 

I can keep going, but I will just bore you.

 

Shoot me a PM and I would be more than happy to answer any questions you may have.

 

Cheers

 

Sasha

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