# How much can you borrow with Australian mortgages?



## RobKarin

Hi Everyone,

My wife and I have secured a state sponsored residency visa for Victoria and plan to move within the next year. Between now and then we aim to raise as much money as we can for a deposit to buy a house as soon as we can after arriving. I've been trying to work out which suburbs of Melbourne we will be able to afford by doing some research into how much we would be able to borrow on a mortgage once there. The trouble is every site I visit seems to give me considerably different results. Could anyone offer any advice? We would hopefully be earning a combined salary of about $120,000 and have had results anywhere between $360,000 to $800,000 mortgages. 

Thanks for your help


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## DylanW

Hi There,

Best advice I can offer is as soon as you arrive you should see a mortgage specialist at one of the banks. This is the only way you can get the correct figure you would be able to lend.

Please be aware though that property buying in Australia is very different to anywhere else in the world and believe me it is not a quick nor fun process.

My wife and I have been on the market (with an approved mortgage) since Jan this year and we see about 5 house inspections a weekend. They open for 30 minutes, there is normally over 20 people inspecting at the same time and almost all properties wont sell before auction.. so its a big gamble...

Anyways, good luck.


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## Editor

Hi

I have done some research on this and it seems the multiple of income is anywhere between 3 and 5 times. It will obviously depend upon your specific situation.

Mark


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## Dexter

Have you tried one of the calculators on banks' websites? They can give you a good idea how much you are eligible for. 

Banks will be able to borrow you up to $750k with the current interest rates. Personally I would advise not to go for more than $350k mortgage as interest rates are only likely to go up now.


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## jinw

Hi Rob, it really depends on what you earn individually to be able to compute your net income after tax.


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## RobKarin

Thanks for the advice everyone. We'll have to just wait and see once we settle in and secure jobs I guess.
Really appreciate your responses.


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## Editor

Hi RobKarin

It would be great to hear how it all pans out for you as I think a lot of people will be in a similar situation to you.

Regards,


Mark


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## Troy

Hi Rob and Karin

There is actually a better and easier way to go about getting a mortgage while you are still living overseas. We have helped a lot of people in similar situations - it does require a bit of a change in your approach to making the move - but one that has served hundreds of families really well. Let me know if you want to know more

Cheers
Troy


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## randomwally

Housing in Australia is very expensive, you may find you have to spend a lot more than you'd like to get something decent!

Also remember stamp duty on a house might cost you $15,000-$20,000.

Double check this, but I've also been told having a 20% plus deposit removes the need to have mortgage insurance, which can save you a lot of money on your home loan.


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## Troy

randomwally said:


> Housing in Australia is very expensive, you may find you have to spend a lot more than you'd like to get something decent!
> 
> Also remember stamp duty on a house might cost you $15,000-$20,000.
> 
> Double check this, but I've also been told having a 20% plus deposit removes the need to have mortgage insurance, which can save you a lot of money on your home loan.


Hi

A lot of our customers are often quite shocked at the prices of Aussie property (South African customers) for the size they get - but it is all relative and will depend on where in Australia you are looking to buy/move to

If you do not have PR (Permanent Residency) in Australia - then you can not buy second hand property- you can only buy a new property.

If you are newly arrived then the banks will not lend you money for 12-18 months and you have built a credit rating.

What is Lenders Mortgage Insurance? - this is the insurance policy your financier has to take out in case you default on the loan.

If the LVR (Loan Value Ratio) is 80% or less then mortgage lenders insurance is not applicable. Some banks do go to 85% but conditions apply

The amount of insurance you will pay depends on your situation - e.g. $255K borrow on a $300K property (85%LVR) - insurance would be around $1500 - $2200 - because the the LVR and the loan is low

If the loan was for say $950K on a $1mill property (95%) then insurance would then be around $48K-$45K - because of the higher LVR and loan amount.

Stamp duty rates will vary depending on which State you buy in. Generally though if you are building a new house you will only pay stamp duty on the land - but Wally is right - it's not cheap

If you are a non-resident of Australia (i.e. you earn your income in another country) and want to buy an Aussie property it can actually be easier to get finance while still living overseas

Cheers
Troy


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## randomwally

Troy said:


> _Snip_


Cheers! Thanks a lot of clearing that up Troy.

I've lived in Australia my whole life and am still shocked by property values - saw a "fixer-upper" 2 bedroom Queenslander going for nearly $1 million in Brisbane the other day; but then you can get quite reasonable houses out further for 1/3-1/4 of that price.


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## Troy

randomwally said:


> Cheers! Thanks a lot of clearing that up Troy.
> 
> I've lived in Australia my whole life and am still shocked by property values - saw a "fixer-upper" 2 bedroom Queenslander going for nearly $1 million in Brisbane the other day; but then you can get quite reasonable houses out further for 1/3-1/4 of that price.


And it will only get more expensive. For anyone migrating to Australia - they are crazy if they do not investigate the financial and taxation benefits of investing in Aussie property BEFORE they arrive. There are some awesome opportunities out there but as with most things - it has to be at the RIGHT time, for the RIGHT reasons at the RIGHT price

That is were we help migrating families


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## Editor

Hi Troy

Thanks for the tips - they will be vital for people moving to Australia. Sometimes it is easy to assume that the mortgage system in Australia will be the same as your former homeland when it is certainly not!

Regards,


Mark


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## oompaloompa

RobKarin said:


> I've been trying to work out which suburbs of Melbourne we will be able to afford by doing some research into how much we would be able to borrow on a mortgage once there. The trouble is every site I visit seems to give me considerably different results.
> Thanks for your help


Generally speaking, u would need to pay an absolute bomb in stamp duty to purchase an established property.
The further u go out frm the city the cheaper it gets.

The upper class suburbs of Melb are located in the east. 
There r land parcels opening up in the North (eg Craigieburn, 35km from CBD), West (eg Wyndham Vale, 30km from city). As an indication a new house & land package can be had for $350K in Wyndham Vale. This will not even entitle u to get a small apartment in inner city or inner eastern suburbs.

With finding a suburb u also need to establish (i) where u r working (ii) whether u need a car or happy with public transport (iii) general character of the area. Most of the new estates have all the mod cons but none of the inner city grunginess/old world charm of the inner suburbs...

The banks are interested in yr employment history. With me I had to wait 8 months b4 I found a lender who would get me the mortgage. I would select an area that I intend to buy in, rent for a while n c how it goes. Good luck!


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## Troy

The banks are interested in yr employment history. With me I had to wait 8 months b4 I found a lender who would get me the mortgage. I would select an area that I intend to buy in, rent for a while n c how it goes. Good luck![/QUOTE]

Hi - the thing that most people fail to grasp is that it is actually better for most people to get an investment property BEFORE they arrive in Australia. This goes against the grain for a lot of folks until they understand the all the reasons and how it works - but you can

1. Establish a credit rating before you arrive
2. Get a lump sum of cash from the Aussie tax man after you arrive
3. Pay less tax each year thereafter
4. Have a wealth creating asset
5. Leverage the investment property to get you own home

It amazes me how many people fail to find out how thy can do this before they arrive in Oz - don't rush out and buy anything though - find a company that can assist in choosing the right property in the right areas for the right reasons.

I can put you in touch with a group that does just this if your interested

Troy


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## RobKarin

Thanks for the information, very useful so much appreciated.


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## RobKarin

Troy, do you have any further information on the route that you have mentioned, perhaps a website with info on how this works?


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## Troy

Hi RobKarin

Go to www.praustralianproperties.com - they are in the process of updating the web site but you will still find useful info there. Get back to me with any questions you may have

Cheers
Troy


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## Editor

A passing comment - while it is good to know how much you can borrow as a multiple of your income, is this the right way to look at mortgages?

Should we not be looking at what we can actually afford? We all lead very different lives and have very different spending habits.


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## DylanW

Well said Editor!!!...

If our case the bank didn't even ask us to mark down what our monthly expenses are.. They didn't really care... They just simple looked at both our incomes and said we will give you a mortgage at a max of x... Well thankfully we did our spread sheets and worked out what our max was. it was below what the bank offered due to monthly ongoing expenses..

We finally bought. Get keys on the 27th of August.

Dylan


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## Editor

Hi Dylan

I think your comments say it all - the idea of basing everything on a multiple and allowing people to borrow as much as possible is why the UK property market is in such a mess. When you also throw 100% mortgages into the mix you have an accident waiting to happen.

I hope the move goes well  

Would you let us know your experience of the Australian housing market in the run up to getting the keys if you have time?


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## DylanW

Well here is the issue...

My wife and I have discussed a few times... She being Australian and me being a 3 year ago immigrant what a disadvantage most immigrants and how it would be to get into the property market in Australia...

The bank will in most cases only lend you 80% of the loan hence you would need to find the 20% deposit and depending where you live in Australia that could be a huge amount...

If you take a 100% loan which they dont do most of the time then you have mortgage insurance which costs you a bomb... 

Editor I have made lots of comments on the property market on another thread you started but here is a short version:

I come from a country where an open for inspection is from 2 - 5pm.. You go see a few places and when you find a place you like you go ahead and make a written offer. Say the place is selling for $1mil you start and offer $900k. 

Then the owner generally counters and say offer $950k and its yours... 

DONE DEAL! Easy as pie!

Here I got told by my mother in law to look and hopefully find 4 or 5 houses you like so when you go to auction you possibly have a chance of getting 1 out of the 5... its like saying "it doesnt matter which you prefer, be happy with what you get"..

If you like a property and want to secure it... the best is to do so prior to auction but then again... You have to over pay to take it off the market... Well in Sydney East the property market is so crazy that its the only way to do it unfortunately.


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## Editor

Hi DylanW

Your post shows that you have to be prepared to drive a hard bargain or if you want the property that much you will probably need to pay more than you had planned.

I think many members will find your comments on the following thread very useful as well:-

http://www.australiaforum.com/housing/20791-would-you-buy-property-today.html

Regards,

Mark


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## prozac

The property market in Sydney is quite heated at present, I think driven in part by foreign buying from Asia. Will the market soften if this buying stops due to change in govt policy overseas or if these investors decide that with a falling AUD they are loosing any capital gain to exchange rate fluctuations.


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## debarnab

Hi Troy, I am a PR but not living in Australia. Willing to buy a property, how to proceed?


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