Hey All!
I hope everyone is well.
I have found a nice apartment that I want to fix up.
In regards to finance – i just want to know if im over borrowing.
Heres where I'm at:
My after tax income is $2874 per month.
I have a line of credit through my folks where by I am taking 20% (60k) of the purchase price of the property which is in total 300k.
I am then borrowing the remaining 80% (240k) as a normal loan. I have 10k in cash and I am getting the FHOG.
My repayments if i were to borrow 300k will be $2034 a month. Excluding any input from my own cash into the loan. (I know im going to have stamp duty etc).
I will not move straight into the apartment as Im fixing it up (my folks are helping me financially for this and im paying them back when I sell). But when its complete I will be living there,
Unfortunately its an auction which i guess could be good for me or bad. I will not over bid at all and i'm still talking to family friends as to what is the max i should pay for the propery which may not even be 300k.
I should also point out that in 5 months I am getting a pay increase and will have an extra 400 net in my pocket per month (this pay increase is gauranteed).
I dont have any debt or loans.
So basically I want to know if I am over extending myself. The property is perfect for me to do up as I have many contacts as builders etc (my dad is a builder)… and i'll be doing the work myself.
I would greatly appreciate any advice or critisism.
Cheers
Hi Dj_seik,
Have you spoken to a Mortgage broker? You may be able to physically afford the loan repayments, but banks use a formula to work out what they think you can afford based on cost of living for you and your circumstances.(their formula) v's income.
Regarding Reno: Heard Steve Mckinght say something like: "Do you have an value in todays dollars of what the property will be worth after renovations regardless of whether market goes up or down? Work on a worse case cenario. "
Mortgage broker best option to see what the banks are after and how to best prepare so you are in a more favourable positon to be approved for laon.
All the best, Matt
Hey Matt,
Thanks for that.
The only other issue I have is the auction has to be unconditional. So whilst I can get a pre approval – the actual approval wont occur until i actually buy the property and the bank does an evaluation on it.
Is there anyway i can ensure its fully approved prior to auction? So i can bid unconditionally?
Cheers
Regretfully not as the eventual bid price is still to be determined.
Certainly you can get a valuation of the property and no doubt your broker will do that but it means nothing if you decide to bid a little higher to secure it.
Matt is correct it is not a matter of you being confortable with the loan repayments but more of a matter whether the finance meets the square box of the average lender.
How long will you be living in the property before you sell it ? This could have a bearing on your stamp duty concession and FHOG eligibility.
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for your reply. So I should be able to get the finance finalised prior to auction – depending of course on the final bid?
I will be living in the property for a minimum of 3 years. I will be doing it up and so it should be pretty sweet once im finished hence i'll want to stay there
Im sorry I dont understand what you mean by : "square box of the average lender."
Cheers
You must be logged in to reply to this topic. If you don't have an account, you can register here.
