Buying a house in Melbourne

[Mel4Mike]

Good day to all

We are in the last stages of our process and trust in our God Almighty that we will soon be landing our feet on Auzzie ground.

I just want to know can one buy a house on a 457 visa and what kind of deposit is required?

Many thx

[Sassyninja]

Last I read, banks hesitant to grant loans to non residents. They're requiring up to 30% deposits.

[Mara]

I cannot answer your question, but I would like to give you some advice. Do not be in a hurry to buy a house. You need to first have the opportunity to check out the city and to make sure that where you decide to buy is the absolute best place for you. If you buy an existimg house, the stamp duty in Victoria is high, you do not want to find out six momths later that the suburb is not a good fit for you.

As a 457 is a temp visa, personally I would be very reluctant to buy property before you are able to convert to a permanent visa.

[Eyebrow]

There are issues with the property when you want to buy on a 457. It must be declared a foreign investment property before you can even put in an offer.

Even though you want to live in it, if you buy it as a foreigner the property must be so declared. Because as a 457 your are considered a foreigner and only x amount of properties may be bought be foreigners.

Then you have to find someone who will give you a mortgage. Apparently difficult because if it is over 25 years, and you are only allowed to stay 4 years, then it has other problems attached to it.

[Jacques Voogt]

You can buy even if you are a non-resident or a foreign investor or before you come over.

EDIT (You can but it will not be easy, see eyebrows post above)

I'll say what my banker in Sydney told me a week ago. Note these things differ from one state to another and all info is usually available on the state website.

For someone with PR or citizenship they want 20% deposit, stamp duty and solicitors fees.

Average houses are in the region of $800K (those are usually located 40km from the city and far from public transport) That is a $160k deposit

Stamp duty on that would be around $32K

In total around $190k would be enough to cover the deposit and other costs.

And off course you do not get any of the stamp duty back when you sell, so that is a dead loss.

You can also buy a house with less than 20% deposit, all the way down to 5% but then they want you to buy additional home loan insurance and they take a closer look at affordability.

I would not be surprised if they call a 457 visa a risk factor.

At 5% deposit($40K), that insurance would typically be around $15k and they need it up front.

Add on the duty and you are up to $85K.

The only other option is to buy a new home that was not occupied before. (Read new suburbs 50 to 70km from the city with no public transport and very little other facilities like hospitals, schools etc.)

Make sure the home is worth less than $500K. That far out, they typically are.

Now the state will waive the stamp duty if it is your first home and if YOU occupy the home and you only need $25K deposit and perhaps $10K worth of insurance or $100k as a deposit. Or a mix between those.

So if you are prepared to either travel longer than an hour to the city for work or if you can find a decent job far out, this can work.

Or perhaps you have a bit of money saved up or a bit of profit from the sale of your home.

Personally, I would buy a smaller place closer to the city as investment.

Edited May 17, 2015 by Jacques Voogt

[Mel4Mike]

A BIG thank you to everyone that replied to my msg. This info helps tremendously and we will definitely take advice from this.

[RedPanda]

On the same topic, does anyone know how the prices compare when wanting to build a new house in Victoria, Melbourne. We're thinking of the far Eastern suburbs, like Belgrave, Monbulk, Upwey. I've seen some vacant lots for sale. But we have no idea how building compares to buying?

We have PR visas.

[Mara]

To compare building to buying, is like six of the one and a half a dozen of the other.

Buying:

• You walk in, you check it all out
• You decide you like it
• The gardens are good and you are happy with the place
• You make an offer on condition that a building/surveyor report (that you pay for) has a positive result
• You will be paying stamp duty on the price of the property
• In Australia the money changes hands on the day that the sale officially goes through.. registration will happen at some later date.
• It is highly unlikely that you can move into the property before the official sale date, have never heard of that happening here.
• Official sale dates usually take place on a Friday, in Victoria.
• Your mortgage (loan) starts with effect from the official sale date.

Stamp Duty on an existing property: http://www.sro.vic.gov.au/SRO/SROCalcs.nsf/transfer?OpenForm

For this exercise, we will presume that the purchase price is $500,000. As a first time home buyer in Australia you will be paying approximately $10,985-00 and if you are not a first time home buyer it will be approximately $21,970-00. This would be over and above the price you are paying for the property.

Building:

• You go and view show homes, until you find a builder whose home you like.
• When you see the show home, please remember it is just full of upgrade, this is not what you will get. Ask the consultant for the price of the show home as it stands.
• You may well find that the show home has had $100,000 upgrades done to it.
• If you are on a budget, forget about major changes, you need to find a plan with which you are 90% happy and accept the 10% you are not happy with.
• In general you cannot move wet areas, and small changes would not cost the earth.
• To give you an idea, we changed all the windows in our home from sliding windows to awning windows, the cost of the upgrade was around $2000.
• You sign the contract for the house and land package
• The builder will give you a completion date
• In general, most builders include floor coverings, but there will be tiles only to the wet areas and the carpets or timber floors will be run of the mill, you will have to pay for an upgrade if you want something fancier.
• Light fittings are not generally included in the price quoted, there will only be a globe on a light fixture in the ceiling, the rest is up to you. If you want them to fit the light fittings you have purchased, it will be extra.
• In general, driveways and landscaping is for your own account, the builders do not pay for them. They do sometimes have specials where the driveway and front landscaping is included. Believe me, the landscaping will be minimal and usually you will not have a say in what is done, except for choosing the colour of the the driveway.
• Kitchens, bathrooms, toilets, are fitted out, you can pay for upgrades on the appliances if you do not like the ones that they have included.
• There are two systems forward (a) you pay your deposit and pay nothing else until the official occupation day. ( you pay your deposit and then draw down on your mortgage as the building reaches various stages. This means that you will be paying rent elsewhere and mortgage payments as the building is built. You will only pay mortgage rates on the amount drawn down, not on the whole amount.

Stamp Duty on an land only property: http://www.sro.vic.gov.au/SRO/SROCalcs.nsf/transfer?OpenForm

For this exercise, we will presume that the purchase price is $150,000. As a first time home buyer in Australia you will be paying approximately $1,935-00 and if you are not a first time home buyer it will be approximately $3,870-00. This would be over and above the price you are paying for the property.

Of course the other item I have to stress, is that for the $500,000 quoted for the existing home, if you pay $150,000 for your land to build, the home may cost you around $200,000 which then amounts to $350,000 which is quite a cost saving. You will often get much more house for your money in building than in buying. So a big question mark in the calculation would be the cost of the land... it is pretty pricey, in most parts of Melbourne.

For myself, I prefer to build, which we have done twice. I can see it going up, I know what I am getting, I can have it as close to the perfect layout that I can afford.

This is just my opinion, I am sure there are many that will have a differing view.

[monsta]

@Mel4Mike There has been a lot of talk here about rent vs buy. I think the consensus here was its not always terrible to rent and invest the money you save. That's partly because the average property price is 5.5x the average household income. That leads to property prices are very high compared to rents.

Sure, you will hear stories about people who made a killing by buying property before a boom. But as the forum members have highlighted here, when you look at what people make on average from a house, renting and investing the difference may not be terrible. So, if you can't buy... You may not be a financially stunted if you have a plan and invest what you save.

But you may want an investment option that's better than the peanuts your bank will give you on a savings account. I would talk to a properly qualified and licensed financial adviser about investing when you arrive. You want to avoid "financial advisers" who are glorified sales people.

At least you will have a bond saved up for when you are a PR and can buy

Cheers

Edited May 20, 2015 by monsta

[RedPanda]

Mara, thank you very much for that post! That is exactly the kind of information we were looking for.