I know, Jess, these are rough times for saving. Quite a few of our clients are using family equity. You get an 80% LVR loan on the new house you buy, then you get another loan for the balance secured by both the new property and your parents' property. (Of course this is if your parents are agreeable, and the bank specifies that they have to receive independent legal advice. Plus, they need to have enough equity in their property to be able to help you out of course.)
I think its a bit too easy to get a mortgage at the moment... and i think it might lead people in to a false sense of security, because if they can only just afford repayments now with rates so low, what happens when they go back up??
When we bought our house we left a fair bit of room in the budget to account for rate rises, and bam, within the first 3 months there were a whole bunch of increases, lucky for us it was only about $50 a 1/4 percent, so ended up being a few hundred dollars more a month.
I guess banks figure if you can't save a deposit how will you pay more when interest rates go up?
The banks work out if you can service the loan repayments by using a higher interest rate than what it currently is to assess you (the assessment rate).
and also, i was under the impression you could change from a variable rate to a fixed rate. so we will be on variable (cause ppl have said there will be some more decreases) and then at the first sign of an increase we will change it to fixed. is this scenario correct? (i hope so).
I think the best way to find out is talk to a mortgage broker - it won't cost you anything and it will let you know where you stand. Also it is getting harder to get a loan with one of the major four banks, but there are still plenty of competitive reputive smaller lenders out there like bank west, INGDirect, IMB, etc who may find you servicable.
Timely thread! We are getting together paperwork for pre-approval, but I am getting more depressed about our chances as time goes by. We are both self-employed which already makes it hard, and we have 10% of the deposit between our savings, money owed to us and some other money we can lend- so its not like its just sitting in our bank account. And our savings history is bad for the last few months as Jan/Feb is always a slow business time.
Man....when I write it all out, it sounds terrible even though we actually should be above to afford repayments....should we even bother applying?!!!
Platinum Member. Love a friend xxx
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