Sunday, January 14, 2018

One expensive purchase

I apologize for not writing much on the blog in the last few months. A lot of things happened and I'll talk about the biggest one of them all.

We bought a house.

This is by far the most money I've paid in my life. The one before that being the car at almost 1/50th the price of the house. :D

Now, the house we ended up buying was very small - 3-bed-roomer with a single garage - compared to what we originally thought we could afford. The land is a mere 220m3 in area. The Melbourne market is really competitive and house go for unreasonable prices. It is still a bit saner than Sydney market though.

Also, the area we bought was an area we didn't even consider initially. We bought in Mernda, which is about 35km North of Melbourne. 35km is not bad at all, but I work in South Melbourne, which means I have to travel through the city to get to work and back home. The average speed in the city is about 10km/h (i.e. it takes 30 minutes to travel 5km).

We had a decent amount of money saved up, but since I'm the only earner in a family of four, the amount we could borrow from a bank was very limited. We bought through negotiation because we couldn't handle the risks of going to a public auction, although we could have saved some money with the latter since it is transparent. The risk was that at the auction, your offer is unconditional. When buying through negotiation, you can do a conditional offer - subject to finances getting approved being the most common. If the bank doesn't lend you enough money, then you don't have to go ahead with the purchase. You don't have that option when buying at an auction and the broker advised against it because if the valuation doesn't come at the market price and the bank won't lend you what you need, you will have to find some mean to fill the shortfall. If you have the backing of the family (locally, that is), then there is less risk because you can find someone to lend that money easily. But not for us.

By the way, we didn't have to pay stamp duty for the house because we were first home buyers and they didn't have to pay stamp duty if the price of the property was below 600k and ours was well below that cutoff.

I don't want to say how much the house was, but it was between AUD 450,000 and 500,000. The mortgage is for 30 years at 3.69% fixed rate for the first 2 years. We put AUD 110,000 towards the house and the rest came from the mortgage. Our mortgage is not that large because we put a large amount in, and the monthly loan repayments ended up being about $150 more than what we were paying for rent at where we rented before. Not too bad, but it will rise in the future. Hopefully, I will be earning more by then which will cancel it out or put us in a slightly better position. Hopefully....

I'm happy that finally, we have a house. It would have been great if we could go for a double garage house because we would need to buy another car at some point and the Aurion being the beaten up one will have to settle for parking on the driveway.

I will write about things I learned in the house hunt in the coming days. Might come handy for someone or for me again in the future - who get to work and back home. The average speed in the city is about 10km/h (i.e. it takes 30 minutes to travel 5km).

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