A majority of young people have the attitude of saying, 'I can't afford a house!'. They may be working on minimum or above minimum wages and with their current lifestyle have over exceeded their life expenses.
We have financial institutions, that encourage the use of credit, by use of credit cards, without proper explanation of it's use. For example young people may be given a credit card for $1,000 credit limit and only pay the minimum payments expecting no one to chase them up (whilst the interest is building).*
Before credit came in you had to have the money saved before you would make any purchase being shopping or even larger items. It is the 'In' thing to have a credit/master card or visa card but it is an 'out' thing when it is not fully paid.
Then you have the people that know how credit cards work and even with that, only use debit cards (where there is no credit being used up - it is you own money you are spending).
From this you maybe be then thinking am I in a position to purchase a property, can I do it?
Each person will have different circumstances that they are involved in, which ascertains their current financial position.
Most people will purchase properties jointly with their partner or even a family member of trust. Trust is going to be the big thing that allows this home ownership to continue based on joint discussions and confirmation that it is the right time to do this.
I can't say what is the best or right time but usually it is a simply, little or no outstanding debts and a substantial initial deposit inclusive of other pre-purchase costs.
Pre-purchase costs are material items you will need to us in your own home, State stamp duty costs, lawyers fees- which will include home inspection fees and reports.
Imagine that you and your partner want to buy the best house
you want too and statements like this make your dream hard to reach. This is
because you are both starting from scratch! Don’t let it despair both of you –
make it spur you both together to acquire the optimum in savings, to hence go
forward and meet your dreams.
Scenario 1:
Borrowings $349,000 Property
Purchase Price $380,000
Joint Savings (Deposit) $31,000
Extra Costs: Estimate Solicitors Costs $3000
(Inclusive of building inspections, pest
control, Title Registrations & search fees $212)
Stamp
Duty on Property $ 14,000
Loan Approval Fee 600
Lender’s Mortgage Insurance 8,900
(may be required by lender)
Building & Contents Insurance 2,000 per annum
Moving
costs $10,000
(Inclusive of household
furniture to accommodate the new home owners)
Total maximum cost may be $428,500,
unless Lender’s Mortgage Insurance is not required then the maximum cost would
be $416,900. Keeping in mind of total
borrowings is $349,000 this now means
that the maximum remaining funds
required to purchase and move into the property would be from $36,900-$48,500.
*After ten years the loan
could be reduced to $260,000 - thus providing equity on property compared to
date of purchase $100,000, not including current property valuation let’s say
$430,000 thus making the equity on
property $150,000.
Scenario 2:
Borrowings $219,000 Property
Purchase Price: $250,000
Joint Savings 31,000
Extra Costs: Estimate Solicitors Costs
$3000
(Inclusive of building inspections, pest
control, Title Registrations & search fees $212)
Stamp
Duty on Property $
7,300
Loan Approval Fee 600
Lender’s Mortgage Insurance 2,410
(may be require by lender)
Building & Contents Insurance 2,000 per annum
Moving costs $10,000
(Inclusive of household
furniture to accommodate the new home owners)
Total maximum cost may be
$275,310, unless Lender’s Mortgage lenders Insurance not required then the
maximum cost would be $273,900. Keeping
in mind of total borrowing borrowed
$219,000 this now means that the
maximum remaining funds required to
purchase and move into the property would be
from $23,900 -$25,300.
As a general rule will
require a minimum 5 per cent of the purchase price as a deposit. You normally
will get a pre approval Home loan before you purchase.
"Lenders have recognised the
difficulty that many aspiring home
owners experience when searching for now extinct no deposit
home loans. Many lenders are now offering low deposit home loans
that allow borrowers up to 95 per cent of the purchase price."
owners experience when searching for now extinct no deposit
home loans. Many lenders are now offering low deposit home loans
that allow borrowers up to 95 per cent of the purchase price."
Repayments Examples: based
of $40,000 each net income
Repayments
|
Interest paid
|
|
Monthly
|
$2,440.26
|
$529,493.60
|
Weekly
|
$562.78
|
$528,936.80
|
Fortnightly
|
$1,125.77
|
$529,100.60
|
Half monthly paid fortnightly
|
$1,219.62
|
$529,126.40
|
Calculations based on loan amount of $349,000 with
an interest rate of 7.50% and a loan term of 30 years.
Basic Repayment Calculator
Repayments
|
Interest
paid
|
|
Monthly
|
$3,724.73
|
$991,902.80
|
Weekly
|
$859.24
|
$991,414.40
|
Fortnightly
|
$1,718.67
|
$991,562.60
|
Half
monthly paid fortnightly
|
$1,861.92
|
$991,582.40
|
Calculations based on loan amount of $349,000 with
an interest rate of 12.50% and a loan term of 30 years.
Basic Repayment Calculator
Repayments
|
Interest paid
|
|
Monthly
|
$1,531.28
|
$332,260.80
|
Weekly
|
$353.15
|
$331,914.00
|
Fortnightly
|
$706.43
|
$332,015.40
|
Half monthly paid fortnightly
|
$765.32
|
$332,030.40
|
Calculations based on loan amount of $219,000 with
an interest rate of 7.50% and a loan term of 30 years.
Basic Repayment Calculator
Repayments
|
Interest
paid
|
|
Monthly
|
$2,337.29
|
$622,424.40
|
Weekly
|
$539.18
|
$622,120.80
|
Fortnightly
|
$1,078.48
|
$622,214.40
|
Half
monthly paid fortnightly
|
$1,168.37
|
$622,226.40
|
Calculations are based on loan amount of $219,000 with
an interest rate of 12.50% and a loan term of 30 years.
The above illustration of
repayments are based on interest flats rates but the difference shows what
could happen if interests rise to
another 5 per cent maximum – If
repayments can be met on the 5 per cent on joint income, both
partners should view it as if there was a loss of one income , which may or may
not happen. If one’s income can maintain repayments of the high repayment plan,
then that is the type of borrowing both should take on board.
First thing first, both
should have current full time job at least 6 months maintained, ninety-five per
cent of the home loan can be borrowed by lenders but the more savings you have
the less you borrow.
There are many types of Home
loans in the market: interest only and principal and interest, variable and
fixed rates. Seek the right ones for yourselves.
Extra repayments on your
Home Loan provides a withdrawal facility, which shows you how much you can
redraw in the future and use (if necessary) but the Home Loan goes up, by the amount withdrawn.
Check out further figures
for mortgages:
* Simply, Credit is credit not a loan but it can end up to be a loan if not paid in full as contracted.
No comments:
Post a Comment