I just want to write some things down so I can get a clear picture. Excuse my babbling!
There is a house we have found which is more than perfect for what we want. It's $319 000 asking price, which we could probably bargain down to $317 000 (or less), which is then atkeast 3k under our target amount for a house.
(the house is on an 805m2 block, 4 bedrooms, built in downstairs, three decks, a shed etc - i might post pictures in a week if it's still available)
We would have to resign our lease, which will then expire 19th April.
If we look into buying this house, if it's still unsold and no one else is interested, we could probably have everything done in a month to two months which would mean we would have to cancel our lease contract, which is really no biggy anyway with the rental crisis looming.
If we buy the house, we have approx $12-$13k saved. It would cover the mortgage insurance ($11.5k) and some fees. We either have a choice of putting the solicitor fees and building inspection fees on my cc and paying it back once the FHOG is granted. The rest of the FHOG (total is $14k) will go back into the mortgage to remain until we need it for renovations. (Please note: I don't need credit card preaching, so don't bother. That is not the issue I am discussing.)
Another choice we have is privately borrowing 5k from BF's mum in return for some labour work at her property which he is fine with doing. That would cover the fees.
If we don't buy this property, we have to start looking for others pretty soon. Ideally we would like to be in our own place atleast a month before our lease expires for breathing space (so, mid-march).
Why? you ask. why not rent longer?
A few reasons. We would be required to sign a 6 or 12 month lease in our next rental property, which would take us up to october. The rent we would be paying would be about the same cost or more as a mortgage per week. This would mean the only money we would be saving would be spare change plus other costs we don't have as a rental verse homeowner, like rates and water etc.
another reason is that the 14k FHOG expires on june 30th, going back down to 7k.
if we were to wait until after then, probably when a six month lease expires in october, we would not have that extra amount saved due to paying a lot of rent etc (as it would just be BF and I paying rent verse right now it being BF, myself and flatmate). so ideally we are looking at having $27k now ($14k of which comes AFTER we buy the contract), or having possibly $20k in six months time.
why pay mortgage insurance? i know it's a lot of money for really nothing, however - the FHOG is $14k, which covers the MI plus fees. if we DON'T utilise that, it means we are paying $5k MI (in october) of our own money, plus a 5% deposit and fees. so really the only difference is that we are into our own house sooner and paying it off sooner.
this way, while nothing is essentially free, we are able to save 6 months worth of dead rent money by putting it into our mortgage sooner, and we are able to utilise the upped FHOG - which was introduced to 'save' the economy.
All it really rests on now is whether the house is still unsold, and whether I can get approved for a loan in time.
*just thinking out loud*
December 26th, 2008 at 10:58 pm
December 26th, 2008 at 11:30 pm 1230334227
How do down payments typically work in Australia? Here, 20% down is recommended. How much would you be putting down?
December 26th, 2008 at 11:40 pm 1230334806
December 27th, 2008 at 12:42 am 1230338541
we are not putting a deposit down.
we're not buying because the lease is expiring. we're extending the lease because the lease is expiring
i don't sound excited about the house because i don't want to get emotionally attached to it. it's more than what we want in a house - it's absolutely perfect and then some. i just don't want to fall in love with it to find out it's gone, is all.
our savings are for the house, we have other savings, i am just talking about our house savings.
December 27th, 2008 at 02:34 am 1230345289
December 27th, 2008 at 03:27 am 1230348475
December 27th, 2008 at 04:07 am 1230350826
I say wait until you've saved up a substantial down payment.
December 27th, 2008 at 05:57 am 1230357421
and scfr: yes. i am sure. the laws are different here.
December 27th, 2008 at 12:03 pm 1230379439
December 27th, 2008 at 03:48 pm 1230392902