ahmedwaseem2000

Hi All,

I am planning to buy home this year or early next year.

Just to give you the background about my savings. I had been borrowing all my savings to my family overseas and now I am getting the money back.

I am not aware of the process here. I did started reading about buying homes and I am still pretty much clueless about the process. I do not have any prior experience of buying home so I dont know what are all the factors to consider. neither do I have experience of getting a mortgage. Hence, I have the below questions to help me understand the process of buying home and getting a mortgage. I would be looking for a 2-3 bedder home(not an apartment).

1. Since, I had borrowed my money in regular interval and not held in my account. how long should I wait before applying for the mortgage?

2. I am planning to buy a home between 500K-550K. which suburbs should I be looking at? I have been thinking about all train stations between parramatta and blacktown. I need to travel to CBD every day so a 10 minutes walk or bus ride before train should be fine.

3. Since, our extended family is overseas I wouldn't want to close the option of returning(I have read few posts here were people have mentioned about returning even after a very long stay). So, in case if I have to return home I have to either rent it or sell it and I would be looking for a quick transaction. can you please tell me which are all the factors available in home gets it sold?

4. Can I close a fixed interest rate mortgage earlier than the agreed term? Or should it always be variable rate to be able to pre-close it?

5. I am not sure if I can get new homes for the range I am looking for?

6. Will there be any discounts at all that I would be receiving like first time home buyers?

7. How to negotiate with the seller ?

8. Can I ask the lender to not to charge me for LMI as I dont have 20% deposit?

9. How to check my credit ratings?

10. Are the big 4 banks best to borrow from? Can you suggest\recommend any other better one's?

11. What is the process of buying a home?


Thanks for your patience and replies!!

NickyC

You have rather a lot of questions there.

Take a look at these sites. They might answer some of them for you.

http://www.fairtrading.nsw.gov.au/ft..._property.page

http://www.lawsociety.com.au/cs/grou...ent/657101.pdf

ahmedwaseem2000

Perhaps I do have lots of questions and I have just started browsing through.

Do you how reliable the information provided by sites like domain.com.au or realestate.com.au is?

Thanks for your reply!!

spouse of scouse

This NSW government web page will answer many of your questions.
http://www.housing.nsw.gov.au/Home+B...ing+a+Home.htm

NickyC

Really depends on what information you're referring to.

Statistical information about suburbs and the house price reports (that you pay for) are trustworthy because they're based on data from official sources.

Anything written by an agent (ie. the advertisments) definitely not. Never assume anything an agent says is true (whether spoken or written) - always verify with your own eyes or via another source.

Craig Vaughan

1) Borrowed money being paid back: Depends. if you have a 15-20% deposit then banks will not really care where the money comes from. However, if you are wanting to purchase with less, say a 10% deposit, then generally you willl need to show 5% of the purchase price in your bank account for 3 months. That is, if you purchase for 500k, then you would need to show 25k has been sitting in your account for 3 months. Note, there are exceptions.

4) Fixed rates can have early repayment adjustment fees. That is, if you choose a 3 year fixed rate at 4.8% and at the time you wish to close the mortgage, the 3 year fixed rate was 4%, then the bank is going to charge you 0.8% on your loan balance x the number of years left on your mortgage. Reason, they can now only lend those same funds out for 4% and will therefore charge you the loss they made. However, if say the 3 year fixed rate at the time you wanted to close was higher than 4.8%, then the bank will let you out for free as they can lend funds out at a higher rate and no loss.

Note - the calculation is a little more complicated than this but above is the rough policy.

6) I think you are in NSW? If so, first home owners grant and stamp duty concessions now only apply to new builds. This is the same in QLD and Victoria. WA and SA still have first home owner grant benefits available.

8) The only clients that can ask for and receive LMI waivers are medical practitioners. One lender will do no LMI to 85%, otherwise, you will need to pay LMI unless you have a 20% deposit or a doctor/vet,

9) you can check your credit rating at www.mycreditfile.com.au - there is a free version which you wait for, or a paid version that will cost about $40. Note, unless you think you have an issue with your credit file I would suggest this is perhaps a waste of money. Unlike some countries overseas, Australia credit file system very much a negative system, that is, only reports if you have done something wrong. NOt a scoring system like the US

10) Which banks are the best - very much depends on your situation. Ie, if you have some policy issues around income, employment, visa status, deposit, location of property etc then the banks open to you may be limited. Further, interest rates and LMI premium differ widely from lender to lender. So it really depends on your situation which lender is best. As a rough guide to interest rates, variable is now below 5% and fixed currently around 4.8% depending on the term.

11) As for process of buying home, generally you would get a fully verified pre-approval first Once you have this, you would then start making offers. Sorry for this self promotion, but there are books out there that go through this in detail but also quick read - i myself have one of these books (hardcopy or ebook version) you can purchase from Amazon.com or my website. its actually currrently cheaper on Amazon titled "buying property in Australia, a guide for non Residents" by Craig Vaughan - yes it says non residents but the contents are really a walk through guide for any migrant to Australia. No need to buy mine of course, im sure there are other books out there on the topic as well.

All the best with your plans.

Mummy3

Great notes, thanks

ahmedwaseem2000

Many Thanks Craig for this fantastic information.

I have just started browsing. I have to get familiar with many aspects of buying the home.

ahmedwaseem2000

I was reading through the process of how banks will pay the loan amount. I understand that bank will evaluate the property itself pay as per the evaluation. It would cost like 0.25% each time if this fails.

How often does the bankers evaluation and agreed amount differs?
Please share your experiences with me. what is the best way to avoid this happening?

Craig Vaughan

This is something you should be greatly concerned about, especially in NSW. The banks valuation will generally match the price unless you really have paid over the odds. But that hardly ever happens on established homes. If you are looking to buy a new home or build then yes, the valuation can be a problem.

Secondly, ideally you would not be exchanging and paying the 0.25% until the valuation is done anyway. Although, the Sydney market the way it is at the moment, that can be difficult to do.

Overall, valuation is not really a concern, its not something you can really control and therefore not something you should be spending much time on. The key thing here is that you arrange a fully verified pre-approval. That is key - many pre-approvals are not verified and are worthless. Valuation is really the least of your concerns and largely out of your control.

ahmedwaseem2000

1. Well, Just spoke to a NAB home loan consultant over the call center. He told me that they don't do the valuation until we sign the contract. So, as to sign the contract I might have to pay some amount?

2. Fully verified pre-approval - is this specific to a property? Is it same as pre-approved loan?

You have got pretty extensive knowledge in mortgage. Thanks for your patience and answers

bra_boy

#3.

Houses are not always easy to sell, although you may be lucky. If you are uncertain about the future, why not rent for a while longer. Renting a house in Blacktown is about $400 pw, or about $100 pw cheaper than renting $500K from the bank in the form of a mortgage. On top of that, no need to pay property tax, insurance, repairs. Annual savings: about $5000.

Many people (not all) believe that Sydney house prices will fall over the next 2-3 years. The property market at this time is a game of pass the parcel.

Craig Vaughan

NAB do not do fully verified pre-approvals. they will do a pre-approval yes, but the piece of paper you get says "subject to the bank checking your application meets their policy and criteria". A fully verified pre-approval is one where the bank (and mortgage insurer if required) has checked and approved the application upfront subject only to valuation of the property (again, generally not an issue).

NAB can do valuations before the fact - but again, valuation is not something you need to be overly worried about here. i do recommend you stop focusing on valuation as a concern here. Valuation is very rarely a concern - what is, is the quality of your approval before you commit to an offer.

Re signing the contract - the person you spoke to must not understand the position in NSW. In NSW you can get full finance approval (valuations done etc) based on a sales advice and front page of the contract only as it is common to not exchange until such time as you have full finance approval (so that no money is at risk).

Buzzy--Bee

If you wait 3 years to buy a house in Sydney you will be paying 50% more for the same house.

Bookmark this post, revisit it in 3 years and by all means poke fun at me if I'm wrong. I'm pretty sure I won't be.

BB

Alfresco

I agree.