Hi, This is the situation. My sister and her husband currently rent but want to buy. They are having problems getting a deposit together due to the rent they pay.
He earns about $100,000 p/a, she gets about $100 f/n family assistance, they have 3 children.
They currently pay $350 p/w rent
He is not eligable for FHOG (had a house with his ex which he had in part his name for 2 months then they split up and transferred to her name about 16-17 years ago, now he's spewing)
They have I think 1 loan they are paying off which has about $2000 left to pay.
Can anyone think of a way they can get into their own home?
Since she has no income really, I assume they cannot get a loan in his name and put the house in hers to get the FHOG?
Thanks.First thing they should do is look at every cent they spend and what they spend it on. With a $100k income and her earning a bit from the Govt, they should be able to rack up the savings pretty fast, but in life people tend to fit their lifestyle to their income.
The rent is the obvious one; if they are really passionate about buying and getting off the rent treadmill, they should bite the bullet and live in a much cheaper (and probably much worse) house or unit for a year or two.
I know a guy over here who, with his wife, cleans apartments for a living. They live in a 2 bed apartment with 4 kids where they work, so get very cheap rent, and have done for 20 years. Then oldest son has just moved out. They own an 8 apartment building and 2 houses themselves. That's what I call sacrifice and it paid off for them.
No doubt there will be various other wastes of money that can be trimmed from the budget. The hard part is being honest with yourselves about what you waste money on and actually cutting those expenses from the budget.
For example; video library membership or cable/satellite tv subs, one car instead of two, only buying second hand kid's clothes, no smokes or grog, cut up the credit cards etc, etc. All hard yards, but necessary to get ahead.
As soon as they get a decent deposit together they could look at buying a place and using it as an I.P for a while to help speed up the process of reducing the debt (the tax returns for a guy on $100k would be rather nice). Then once they are more comfortable get rid of the tenants and move in.Hi Linda,
I am pretty sure that so long as your sister has some income (ie family payment) she can have her name on the loan and thus they will be eligable for the FHOG. I did this with my wife about 13 years ago and it worked out fine. The best way to find out for sure is to speak to a mortgage broker as they will help as much as they can to get your sister finance.
Hope this works out for your sister.
Regards,
Mark
Hi Marc, yes I know of a few things money is wasted on such as pay tv, alcohol and smokes, unfortunately they won't move to a cheaper place as they don't like having close neighbours and are on 5 acres but the house itself is crappy. I told her to buy that and do it up, but doubt they will but if they want house and reasonable land, then that is as cheap as they will get at 260k i think is the price it's for sale at.
Mark, So would both have to be included because i thought if 1 had had a house then they both were inneligable if both are on the loan….am i wrong here?
just seems such a waste to be paying out that much rent!
Thanks again.
Hi Linda. On the FHOG paperwork it asks for all this info, and states (for NSW ) regarding eligibility ' must not have previously owned a residential property anywhere in Aust prior to 1 July 2000' or ' Must not have owned and occupied a residnetial property for a continuous period of at least 6 mths anywhere in Aust after 1 July 2000 (the latter, allowing for investors to have IP without affecting FHOG)
So that should clear that up for you. That said, depending on how much they are wanting to borrow, they should easily qualify for a 100% loan, which are fine, and that will mean all they will need is stamp duty and closing costs etc. If on 100k pa they can't do that there are some issues. Even then, there are creative ways of dealing with the vendor that may help, and some lenders (Rams come to mind) will lend up to 110% without paying LMI id a friend or family wish to offer a limited security against their own property……great for the buyer, not so great for parent/friend etc) Let me know if you want any more specific info.
Hmmmm yes, that seems to be their problem, her hubby and his ex bought a house together (even though his name was only on it for 2 months) before 2000 in WA. They have been thinking of 100% loan. Wouldn't take them long to save the money for legals if they cut off the austar for a bit etc….They did have a nice deposit but had to buy water for quite some time in Orange and copped a few rather hefty electricity bills where the neighbours electricity was going to their account but they couldn't prove it so couldn't get out of paying….anyway, shall let them know.
Thanks againHi Linda
I was in a similar situation with renting, helping my mum pay off her mortgage (which I received no income for) and trying to save for a deposit. My situation was a little different in that I was single and that probably provided me with a little more flexibility.
I agree with Marc, the first thing to look at is a budget, as boring as it is. However, there are also lots of creative ways of cutting back on expenses and earning more income. I came with a list of various things. The things that ended up working for me – I went on a game show and won a car, then sold it for part of my deposit and we also decided to house sit for a year or two. I am currently house sitting for a couple for have gone OS for a year.
They have to find ideas that will suit their situation, but if they really want it, there is always a way.
Cheers
Rebeccalol…i have aplied to go on a game show myself incase i don't sell my houses….nothing like free $$$$ :p
and tax free!
yep, that too….lol… I won about $900 on catch phrase once, but want to get on 1 vs 100
What about a rent to own?
They can lock in the capital growth while saving a deposit towards the property.
They have a paper trail of regular payments towards the purchase
Looked at more favourably by lending institutions and they get to live and rent the house they will eventually buy. That means that any improvements made on the house belongs to them not their landlord.We have 6 options being excercised these coming months, all tenant buyers have built in equity even without owning the properties all they have is an option to purchase. Due to the inceased market in SA, and because they locked in the price, all have done better than people who are just waiting to save a deposit while they are renting.
yeah, thought of that, but she doesn't understand it and trying to find a rent to buy in this area wouldn't be easy!
Yes I tend to agree with Marc that most people adjust their lifestyle to suit their income. Attached is a link to our Family Budget Planner Excel spreadsheet which may be of help for them.
http://www.propertydivas.com.au/Downloads/famiy_budget_planner.xls
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