Mortgage in Australia

[tgirlsmammy]

Hi All, we lived in Melbourne on 457 visas from 2011 to 2016, since returning to Ireland and having a baby. We are looking at moving back to Melbourne hopefully mid to late 2019, and I'm just wondering if any of you know how quick we might get a mortgage.

 

I have checked my credit rating and it's very good, no outstanding or late payments etc. But I only have a cc with a low limit. My partner would be pretty much the same except for a higher cc limit, and I havent checked his so hoping his is excellent but probably not as we never had bill phones etc.

 

Upon arrival we would of course be renting, start up utilities and perhaps get a new cc with a limit of about 10k. I might get a small loan to buy a more expensive/newer car.

 

If my partner landed a perm job and I a maximum term position (the industry I would like to return to works on government contracts), do you think we would get approval within a year? Would I be better getting a perm job initially for the application then going for the job I really want?

 

I'm not looking for a discussion on how much houses are in Melbourne, we are well aware of that. I just have no idea how long we will need to be working etc. Before we can get approval.

 

Thanks!!

[themaccas]

Hi All, we lived in Melbourne on 457 visas from 2011 to 2016, since returning to Ireland and having a baby. We are looking at moving back to Melbourne hopefully mid to late 2019, and I'm just wondering if any of you know how quick we might get a mortgage.
 
I have checked my credit rating and it's very good, no outstanding or late payments etc. But I only have a cc with a low limit. My partner would be pretty much the same except for a higher cc limit, and I havent checked his so hoping his is excellent but probably not as we never had bill phones etc.
 
Upon arrival we would of course be renting, start up utilities and perhaps get a new cc with a limit of about 10k. I might get a small loan to buy a more expensive/newer car.
 
If my partner landed a perm job and I a maximum term position (the industry I would like to return to works on government contracts), do you think we would get approval within a year? Would I be better getting a perm job initially for the application then going for the job I really want?
 
I'm not looking for a discussion on how much houses are in Melbourne, we are well aware of that. I just have no idea how long we will need to be working etc. Before we can get approval.
 
Thanks!!

I think you need to have permanent residency to get a mortgage, you will also need to have minimum 3 months salary going into your bank account and yes I think you need permanent jobs or very long contract. You will also need a minimum 5% deposit most lenders prefer 10-20%, you will also need to factor in stamp duty and mortgage insurance (can’t remember what this is exactly called) if your deposit is under 20%. Stamp duty and this insurance alone can add up to $80k depending on the cost of the home and that’s before you pay the deposit.

We avoided all this by buying a block of land, only paying a tiny amount of stamp duty (you don’t pay it on the build) and by the time we actually got to build the house 18 months later the price of the land had gone up so much we were able to borrow against this. It could be an alternative option for you to avoid these buying costs.

[Samson]

If you are not going to be PR

1 - Normal Stamp duty is payable

2 - Stamp Duty Levy Applies additional 4% - 7% depends on state 

3- FIRB payment is required +$5000 if property is less than a million

4- With all the new rules very few banks will lend, you would need a good deposit 20% to avoid LMI and LMI Conditions

5- 6-12 months of a steady job, savings and good financial management should be enough

If you are gonna be PR

1 - Rent for a year

2 - Save (Proof of genuine savings) 

3 Start looking around 10 months. 

Can save upto $50,000+ in fees if you have PR. 

Credit Files are not as comprehensive in Australia yet, I think this year will see a lot of changes. However minimal amount of searches on your file is a plus and no defaults. Repayment history is not recorded or looked at yet, Your case for example, if you applied for a loan for a car, this would have a negative impact on your ability to service the home loan, so your total amount of loan would be lower, having a 10k car loan could reduce you borrowing amount by 50k so do ya research and plan for the home loan, renting isnt too bad as long as you have a goal insight. 

 

[tgirlsmammy]

Hi Samson, thanks so much! We will hopefully be PR... we sent off items and application for vetassess today! I feel suddenly nervous instead of impatient.

I guess if I had a fully paid off car loan that would look better lol, than a brand new one so yes you make sense there! I'll just have to get an auld banger for the first year or so. Or rather my partner can. If I am driving my kid about I want something decent!!

[Marisawright]

2 hours ago, tgirlsmammy said:

Hi Samson, thanks so much! We will hopefully be PR... we sent off items and application for vetassess today! I feel suddenly nervous instead of impatient.

I guess if I had a fully paid off car loan that would look better lol, than a brand new one so yes you make sense there! I'll just have to get an auld banger for the first year or so. Or rather my partner can. If I am driving my kid about I want something decent!!

Don't get a credit card with a higher limit until after you've got the mortgage.

When calculating how much mortgage you can afford, the bank looks at your income, and from that they work out how much mortgage you can afford.  Then they look at what other debt you have, and they subtract that figure from the mortgage figure.

The trouble is, they treat your credit card limit as a debt, even if your credit card is paid up - so if you have a credit limit of, say, $2,000, that's $2,000 less mortgage they will give you.   If you have a credit limit of $10,000, that's $10,000 less mortgage they will give you.

Likewise, of course, if you have a $10,000 car loan, that's another $10,000 less mortgage they will give you.   So I'd be holding off on the car loan. Remember, being brand new doesn't mean a car is safer. Buy a second-hand one with a high ANCAP rating and get it checked out by the RACV and you'll have just as much safety and a lot more money in your pocket (and the chance of a better mortgage).  

Australian banks don't look at your credit rating like they do in the UK.  They're concerned about your capacity to pay first and foremost.

Edited April 15, 2018 by Marisawright