How Much Deposit Will We Need To Buy?

[julieportsmouth]

Hi all,

Just wondered if anyone can help us out on a few mortgage dilemmas.

We are researching the property in Adelaide and we would ideally like to buy something around the $250 - 300k mark. My husband is in IT and earns about the equivalent to $100k per year in the uk (£45k). We are trying to work on worst scenario situation so we are hoping that he will be able to get a job paying no less than $80k in Adelaide. We have a house to sell in the UK and after shipping, flights, renting for a few months in Oz ( we are budgeting about £12k for this) we reckon we should have about $40k deposit to buy when we find the right place.

The problem we have is that when we have been researching what we would be able to borrow percentage wise in OZ it differs massively.

Some say that you will only be able to lend about 70- 80% of the value of the property maximum, others say there are up to 100% mortgages available from certain places in OZ. We would probably need to borrow about 90% of the house price if we want a house of that value. Does anyone have any experience or idea as to whether this is realistic? Do we have enough deposit to get that kind of loan?

Any help or advice would be really great!!

thanks

Jules, Nod & Rio x

[Liam]

You have enough deposit to get a loan but when you borrow above the 80% level you become liable for Lenders Mortgage Insurance (or some equivalent fee under another name). This is basically an insurance policy in favour of the Lender that will pay them the shortfall if you default on your mortgage. So if they have to sell the property and the proceeds are less than you owe the the insurance covers the difference. So you actually pay to protect the lender. Won't stop them coming after you but it is their backstop.

This is why we call this LMI fee a waste of your money. We encourage people to try and have 20% deposit but it is not always possible.

In reality you may need the 90%-100% mortgage so you just need to go to a mortgage broker and have him look for the best one to suit you. Ask for 3 different companies as often they will just use their favourite.

Once your husband can show 6 months in one company /job then it will be a lot easier to get a loan

Tips:

Don't forget you may qualify for the First Home Buyers Grant and the Stamp Duty Exemption. Having owned a home in the UK does not count so you may qualify !

Bring 2 years of your loan statements from the UK to show a good mortgage payment history and the same on any other loans you may have. Also if you have UK bank statements for your day to day account which show that you don't go overdrawn then bring these as well. While the banks may not ask for them a good Broker will mention them as part of the submission to a lender and this may get you over the line for a better rate or product.

Have a look at the RateCity - The online comparison capital - Home site and get to understand some of the loans in the market and the type of rates you can expect. This is a great free information site covering all types of loans, credit cards etc. A Great place to start for a new arrival!

Hope this helps

Liam

[julieportsmouth]

Liam, thanks so much for your reply thats the best advice we have had so far!

We really appreciate that and it makes us a lot more comfortable that we know that there is a good possibility of getting a 90% mortgage if we need it. We are going to do our best to raise the 20% deposit and there is a good chance we will be able to with the sale of our house and cars but I just needed to know that if we can't get the 20% together we won't be stuck.

We have a great credit rating here in the UK and ALWAYS pay all our bills and mortgage on time no matter what and its good to know that if we bring eveidence of that from the UK it will help us get a decent deal. We are going to get copies of our credit reference files and statements from our mortgage company and we keep all our bank statements so its good to know they may come in useful.

Thank you again so much for your good advice.

Julie, Nigel & Rio x