First home buyers advice

[bileduct]

Ok, so after many years of renting and bumming accommodation off relatives I've finally decided to get my own place.

The quick summary is that I'm looking at an 2 bedroom, bathroom and ensuite apartment valued at $420K in the south Canberra area. It is within two minutes walking distance of a major town center, has 2 car spaces, is north facing with unobstructed views and on the 7th floor of a complex currently in development. It's currently subject to an expression of interest from another couple but the realtor has indicated they are going through a breakup and are looking to rescind their offer.

My financial position is that I have $270K currently saved, no outstanding debts or liabilities and am eligible for first home buyers grant as well as stamp duty concession. My credit history looks clean according to a Veda report. Purchasing an apartment close to a major town center is more of a lifestyle choice rather than a long term investment, though there are plenty of government departments in the area and could see it being rented out in the future if I decide to move somewhere else.

The realtor is obviously keen to lock in someone who is definitely interested in purchasing the apartment, so I've already received a few emails from him looking to accelerate things. I'm normally very cautious about laying down large sums of money for anything, so I'm trying to not get burnt while taking up this particular opportunity. Most of the apartments sold a long time ago and the only other ones available with the configuration I'm looking for are inward facing with completely obstructed views.

So I'm looking for any advice on what to do, and more importantly, what not to do. As said I'm a first home buyer so I've never been through, for instance, the process of engaging a conveyancer nor do I know what to expect from them. The development is not going to be finished until mid-2017 so I'm unsure of when I'd need to take out the loan or whether I just need to get pre-approval now, etc.

On the subject of the loan, even though I've got significant savings I'd prefer the flexibility of a lot of that money sitting in an offset account. Any information about reputable lenders and hidden traps around this would be helpful.

In fact, any advice at all would be appreciated.

 

[sensesmaybenumbed]

That's about $270k saved? Massive deposit for a unit at that cost, well done!

I'd really recommend looking into an offset account as part of your mortgage.. Have you locked in a lender or even spoken to a mortgage broker yet?
Here's a basic explanation of offset accounts. It saved us loads.
https://www.cua.com.au/about-us/cua...ia/2015/october-2015/mortgage-offset-accounts

As far a conveyancing goes, I'm not sure in the ACT, and with it being a new development, that could well be something the developer will offer to take care of as part of the deal - ask the agent for recommendations, as well as any friends or family who have also used one in the last few years. It really should be an open and shut case on new developments, but also keep in mind the strata fees involved.

Since you're on the 7th floor, there would be an elevator, and that adds up - ask now for strata fee structure info. Since you've been able to save such a considerable deposit, it's clear you can budget but it;s always good to know.

Good luck!

 

[Pommy]

270k Christ that's a lot of savings. Feels like it's taken us forever to scrape 70k together.

 

[TooheysNew]

270k Christ that's a lot of savings. Feels like it's taken us forever to scrape 70k together.

Be pretty easy when you bludge off your parents.

 

[Vic Mackey]

Ok, so after many years of renting and bumming accommodation off relatives I've finally decided to get my own place.

The quick summary is that I'm looking at an 2 bedroom, bathroom and ensuite apartment valued at $420K in the south Canberra area. It is within two minutes walking distance of a major town center, has 2 car spaces, is north facing with unobstructed views and on the 7th floor of a complex currently in development. It's currently subject to an expression of interest from another couple but the realtor has indicated they are going through a breakup and are looking to rescind their offer.

My financial position is that I have $270K currently saved, no outstanding debts or liabilities and am eligible for first home buyers grant as well as stamp duty concession. My credit history looks clean according to a Veda report. Purchasing an apartment close to a major town center is more of a lifestyle choice rather than a long term investment, though there are plenty of government departments in the area and could see it being rented out in the future if I decide to move somewhere else.

The realtor is obviously keen to lock in someone who is definitely interested in purchasing the apartment, so I've already received a few emails from him looking to accelerate things. I'm normally very cautious about laying down large sums of money for anything, so I'm trying to not get burnt while taking up this particular opportunity. Most of the apartments sold a long time ago and the only other ones available with the configuration I'm looking for are inward facing with completely obstructed views.

So I'm looking for any advice on what to do, and more importantly, what not to do. As said I'm a first home buyer so I've never been through, for instance, the process of engaging a conveyancer nor do I know what to expect from them. The development is not going to be finished until mid-2017 so I'm unsure of when I'd need to take out the loan or whether I just need to get pre-approval now, etc.

On the subject of the loan, even though I've got significant savings I'd prefer the flexibility of a lot of that money sitting in an offset account. Any information about reputable lenders and hidden traps around this would be helpful.

In fact, any advice at all would be appreciated.

So im taking it you dont have your loan sorted? Mate dont sign anything until you have your approval. With your deposit any lender will happily give you money but make sure you have it all signed off from a Provider before you sign a contract.

Have a conveyancer review the contract aswell.

Always be wary with off the plan purchases. As Senses says the Strata can be an issue. I've seen developments give estimates of Strata being an amount, then when the Strata is formed its 3-4 times that. If its only 6 months off completition I'd imagine the unit is already built to lock up? I'd want to see it as devlopers can change the size of units legally by upto 10% i.e theyve sold you a 100m2 unit but then build it 90m2.

I'd ask if the Developer has dont anything else in the area and go check that out. If possible go through the common areas and see how it all looks etc.

I don't know anything about the ACT market but I wouldnt stress if you miss it, chances are another building will be going up next to it anyday now.

 

[Pommy]

I'm by no means an expert and certainly not her win Oz but one thing I read and found alarming is with new build appartments they can essentially change what your buying. Theres been cases in Sydney where they have squeezed an extra unit on a floor and reduced the size of the other appartments to do so. Shifty as hell.

 

[bileduct]

Hey guys, thanks for all the advice.

I'm still waiting to hear back from the sales guy with certainty about the apartment being available for sale but have noticed his language has changed from the couple rescinding their offer to selling instead, so I'm guessing they're gonna try and make some cash on this as well. While the apartment has a lot going for it I'm not completely sold on it and am looking at other options.

I've got pre-approval from my bank for way more than I actually need, but they can't give me the final guarantee until about 8 weeks from settlement which would be ages away. I had a conveyancer in mind but he's off on holidays until February.

Strata certainly is something I need to investigate further. One of the developments had a pool, gym, lifts, etc. and strata was about $2800 p/a. The one without the pool and all the other shit was only $1500 but the guy did say it would be going up in the next financial year by about $500 and wasn't really prepared to show me the rates.

 

[Lambretta]

Bileduct

There is some good advice in this thread already
I have sent you a private message - I am in mortgages, so feel free to call me before 2pm today if you want a chat

If you're buying off the plan - do what Vic says and try and check out the building
Developers are under no obligation to stick to building designs or unit specifications in NSW - it may be different in the ACT. Basically they can change room sizes internally, ceiling heights, and even the size of the actual apartment (but if they do this they have to offer a refund). Look at any building work already done and check out other developments they've done.

Lifts, pools, gyms, garden maintenance etc are all expensive. They will cause strata costs to increase
Try and buy in small boutique blocks wherever possible. If it is a large development, less is better. The less fluffy bollocks they offer the cheaper the strata costs.

Assuming a purchase price of $420,000 and funds to complete of $270,000 you could get away with a loan as low as $170,000 - Personally I would borrow more than I needed to ensure I have safety net (or to maximise tax effectiveness in the event of renting it out later). I would set my loan amount around $250,000. This means you'll have $80,000 left over on settlement. You can pay these funds back into the mortgage (or Offset bank account) to reduce payments / interest, but still retain access to the funds. This means any emergencies, car purchase, holidays, etc are covered effectively using your own money. But if you don't need to use the funds you aren't paying more for the privilege.

SHOP AROUND - when looking for a lender don't just visit your bank. Go and see a broker to see who are out there in the market. Consider credit unions such as CUA or non bank lenders such as ING as well as the majors

Ask for a product with Mortgage Offset so any funds you carry in your every day bank account assist in reducing interest.

If you have no intention of renting out the property in future MAKE ADDITIONAL PAYMENTS. Don't just pay the scheduled minimum. It saves you a lot of money over time

If you're going to rent the property out in future, make the minimum (or interest only) payments and build your funds in the Offset account. Talk to an accountant about why this is a good idea.

Good luck

 

[TheFrog]

Strata certainly is something I need to investigate further. One of the developments had a pool, gym, lifts, etc. and strata was about $2800 p/a. The one without the pool and all the other shit was only $1500 but the guy did say it would be going up in the next financial year by about $500 and wasn't really prepared to show me the rates.

Strata tends to cost more the older the building gets, and the fewer units in the building. I pay around $600 a quarter each for 2 basic 2BR units in the Penrith area.

 

[sensesmaybenumbed]

.

Strata certainly is something I need to investigate further. One of the developments had a pool, gym, lifts, etc. and strata was about $2800 p/a. The one without the pool and all the other shit was only $1500 but the guy did say it would be going up in the next financial year by about $500 and wasn't really prepared to show me the rates.

That's a massive increase. Smells like emergency repairs.

 

[Bandwagon]

. This is obviously a big investment and one you don't wish to get wrong. I assume you've done all our research about the market into which you are wishing to enter, so you've taken care of the logical side of the investment, but spending that much money can be a pretty emotional experience and the sales guy knows this. The best advice I can give is to keep in mind that buying well is not easy and emotions can get in the way of making the right decision for the right reasons. For example, don't let the fear of missing out on a good deal cloud your judgement as to what is and isn't actually a good deal. I realise that sounds a little trite, but simply taking a little time to analyse what is driving your decision making process is easily forgotten in all the excitement, particularly when you are dealing in an area of which you have little to no experience.

On that, I would be a little concerned about dealing with a guy whose "language has changed" TBH, that sounds like you are not getting the full story, or is it that what has been said in person is not exactly what is being communicated in writing? Either way if he's not being completely upfront, or you are unsure, I guess it's stating the obvious, but proceed with caution.

 

[DlEHARD]

Best of luck with your future purchase.