Hi all,
Been trying to do my homework and have stumbled onto these forums. I’m wondering if anyone has an advice to my current situation.I’m in my early 20s and am trying to break into the property investing world. Currently, I’m just building up saving and working on a deposit. I’ve just started my new job over in WA in the mines which pays quite well. I’m still living with the parents which suits my fly in fly out lifestyle and won’t be changing that anytime soon.
Ok. So first things first, ive heard from most people 20% deposit is the way to go and will save me money not having to get mortgage insurance. I know banks do 10%, is it worth getting in quicker or holding off a little while longer? I’m getting taxed pretty heavy, negative gearing would be a good thing for me yes? .
I can comfortably save around $8000 a month and looking to spend around $400000 on the first house. Should I be speaking advice from a financial planner? Also if anyone has an links to webpages on the basics Id love to read them.
Thanks
KarlHi Karl
Welcome aboard.
What's your longer term plan? I assume being on an investment forum you're considering building a portfolio?
I actually don't mind paying mortgage insurance – if leveraged correctly it can be a great way to quickly build a portfolio.
You asked for links – so here some are:
This about leveraging mortgage insurance.
Why a 20% deposit is not always a good idea.
Hope these help.
p.s – a financial planner is not the right person for your situation – instead you should speak with a decent broker about your future plans and what's achievable (I know, I know – sounds biased).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
what is a good idea is finding out what the stamp duty is going to be for a $400,000 house.
this is a cost as well you will incur and can be found out from your State Revenue office web page.To answer your question, it depends on what is happening in the market
Are property prices likely to go up or down in the area you are looking to purchase in, within the specified timeframe it would take for you to save a 20% deposit i.e. $80,000?
If you think property prices will increase, then it might be better to borrow more money e.g. 90% LVR (provided property will increase by more than LVR paid)
If on the other hand, property prices are likely to remain the same or decline, then it would be best to wait to save for a 20% deposit, so that you can not only save on LMI but also benefit from the increase in purchasing power of your dollars (relative to property)
what is a good idea is finding out what the stamp duty is going to be for a $400,000 house.
this is a cost as well you will incur and can be found out from your State Revenue office web page.
in WA it will be $13,015.Some rough figures to go on
A mortgage broker can work these figures out for you if you use oneSo Borrow 321,713.50 with a deposit of $91,301.50 to reach LVR 80% borrowing also $13,015 stamp duty cost
compared to say as an example 10% deposit stamp duty WA
so borrow $361,879.50 (90%) then $56,877.50 deposit (10%) and estimated LMI of $5760 stamp duty of $13.015
LMI and stamp duty is borrowed ) deposit amount to be a little higher for lvr 90% to cover stamp duty and LMIhttp://www.genworth.com.au/homebuyer-centre/tips-for-homebuyers
If it is an investment property you want to use other peoples money not your savings to get more leverage
Also you can capitalize the LMI and borrow for the stamp duty also
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