Peter, is it then you professional advise to borrow the deposit from mom and dad and pretend that it has been saved? Do the banks agree? If so, I think you should be investigated.
I don't like situations where parents put in the full deposit, but it does happen although not like that.
Van said
Quote:
if instead they borrowed 100k from their parents
FAMILY GUARANTEES - What usually happens is that the parents guarantee a deposit to assist their children, but the children still have the loan in their name and usually the parents "top up" the deposit so that the kids don't have to pay mortgage insurance. Usually the children have a reasonable deposit with their own savings.
Occasionally parents do put up a guarantee for the whole 20% deposit but if the children don't have some reasonable savings then the bank will decline the loan. They want people who can manage money, not borrowers who have a zero track record.
It varies from case to case. For example a couple who have been paying rent as well as saving wouldn't be expected to accumulate as much in savings as a couple who have been living at home rent free with Mum and Dad - basic logic really.
In all case banks are fully informed of the proposed guarantee - they have to accept the guarantor as being capable of meeting the obligation should it be necessary. If the guarantor is not in a solid financial position or if they are aged they won't be accepted.
CASH GIFTS - Banks will only accept cash gifts when they are disclosed and the borrowers still have some reasonable savings. Usually the highest LVR available if the borrower doesn't have 5% genuine savings is 90%. That can vary a little between lenders. There is one lender that doesn't need genuine savings, but they are very small and market share would be bugger all. Certainly not one of the big four.
If a borrower wanted to lie to a bank and tell them that monies gifted to them by family was part of their genuine savings, they would have to plan ahead - most lenders want to see 6 months bank statements showing steady savings. Any large deposits have to be explained. I'm sure that some borrowers would go to those lengths, but not nearly as often as many think.
ThePauk
31 Aug 2014, 04:52 PM
Master Josh I said an average job, not a cleaner or blue collar worker. Zaph I agree, they should be able to afford an average home close to their work. I fear, they can not.
Funny but I was at a policemans house today. We had morning tea with them. His wife works part time at the Mater as a therapist - they bought a house at Albany Creek recently - they are both very happy that they did. Repayments don't appear to be an issue.
They fit your profile but they bought a house they can afford. The house probably cost them about 3.5 times combined earnings in a period of very low interest rates. A hell of a lot easier than past generations who paid that multiple but had ultra high interest rates to pay.
Master Josh I said an average job, not a cleaner or blue collar worker
It makes no difference if you are on $45,000 or $75,000 (average wage). You won't be able to afford property in popular locations simply because you work there.
A couple consisting of a teacher and a copper, or similar combination, actually earns quite a tidy household income. It would be in the order of $150k+ in most cases, and that's in very secure jobs with lot's of holiday's, paid parental leave schemes, working hour flexibility and so on. People like this get along quite well and buy houses in Sydney all the time.
Average teacher salary in NSW is 65K, average police officer salary 56K. So you only got the number wrong. Still, 120K can still buy you a good house in Sydney, as long as you don't have children, so I guess your solution of matching up the city's policemen with the city's teachers could work to solve the affordability problem. Not sure if the police and teachers make a great romantic match, but who needs romance when the question of owning a house is at stake?
There are over 8000 suburbs in Australia, 417 have over $1m medians... So they're trying to get an average couple to buy their first home in the top 5% of the country? Why is this such a shock that it's hard? The shock should be that it's possible.
The only thing I can think of is that many of those 8000 suburbs are going to be thousands of square kilometers large with only 300 residents, and so are unsuited for the vast majority of the population. But even if Sydneyite is right, and 417 suburbs account for 20-25% of the livable area, still, why is it such a shock that it's hard but possible for an average couple to reach straight for a top quartile/quintile suburb as their first property?
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
Fuck you have to laugh when you crazy bull wanker pretenders keep on keepin on with this steaming stinking shenanigans!
When interest rates are high it gives people options, wtf is it that you fuckers don't get about this!
I don't get anything about high interest rates, it penalises the borrowers who are mainly young couples with families and rewards savers who are usually older people who have paid off their home. It also penalises small business who have to borrow through banks to expand their business and employ people that we all know. Don't their jobs matter to you?
I do have to laugh when people pretend that a situation that suits their circumstance is good for the whole economy. Talk about self serving stinking shenanigans.
Your downside is someone else's upside and vice versa. Don't you get that?
Any expressed market opinion is my own and is not to be taken as financial advice
I don't get anything about high interest rates, it penalises the borrowers who are mainly young couples with families and rewards savers who are usually older people who have paid off their home. It also penalises small business who have to borrow through banks to expand their business and employ people that we all know. Don't their jobs matter to you?
I do have to laugh when people pretend that a situation that suits their circumstance is good for the whole economy. Talk about self serving stinking shenanigans.
Your downside is someone else's upside and vice versa. Don't you get that?
A lot of savers (high %) are first home buyers bud....think a bit out side your vested interest paradigm !
Lower and lower interest rates are just protective measures to shield the greedy & the incompetent!
The sad thing is there is a end to the wick & that has repercussions on all, including my kids!
A lot of savers (high %) are first home buyers bud....think a bit out side your vested interest paradigm !
Lower and lower interest rates are just protective measures to shield the greedy & the incompetent!
The sad thing is there is a end to the wick & that has repercussions on all, including my kids!
Sure everything economic has repercussions on all of us, that's life. Do you think that wars or disease doesn't affect lives as well.
Would be first home buyers are savers, that true, but regardless of the interest rate they can hardly rely on interest earned to save a deposit, that takes real savings.
You are going to have to learn some basic math if you want to argue this point.
Any expressed market opinion is my own and is not to be taken as financial advice
Sure everything economic has repercussions on all of us, that's life. Do you think that wars or disease doesn't affect lives as well.
Would be first home buyers are savers, that true, but regardless of the interest rate they can hardly rely on interest earned to save a deposit, that takes real savings.
You are going to have to learn some basic math if you want to argue this point.
I don't need to argue the point bud, this is too basic and obvious !
Id say the Reserve bank are shitting their pants as they see no end to the liquidity trap the fed has created in the US.
This is why I am extremely confident and predict the all ords @ 7000 sooner rather than later !
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