Buying a house in Melbourne, from SA?

[RedPanda]

Hi All,
I've tried to get answers for our question with a quick search of the forum, but I didn't find anything that addresses our question directly. (It could be there, and I missed it?)

We want to know if there is anyone who has bought a house in Australia while they are in South Africa? And if there are and you are willing to share:

• How did it work?
• Did you use a legal representative? Any recommendations?
• Were there significant additional costs involved?

As some background information:

• We have activated PR visas(189).
• We have an active Aussie bank account.
• We will be able to put down a substantial deposit, but we will still need a loan for the remainder of the price.
• Our city is Melbourne.

Reasons why we are considering doing this:

• We'll have a house to walk into when we land
• We can send over our container immediately, instead of paying for storage
• We start building a credit record asap, while we are still in SA
• Our monthly "rent" will be invested in our own home immediately
• We will be settled sooner (we hope)
• Buying a house means you can have large trees in your yard (as opposed to building that often leaves an empty lot)
• The area that we would like to live in has almost no vacant land, so building our house might not even be possible there

Like I said, any advice or recommendations from people who have done this will be welcome. Our minds are not set yet, we just want to have as much information as possible to help us with decisions.

Ps the other half of "we" recently joined the forum as GenDemo.

[Sunnyskies]

We looked at this 'briefly' but didn't in the end. Having bought in Melbourne after arriving (5 years after arriving) I would be very cautious of going this route.

But if you want to:

- hire a buyers advocate, they can go to an auction for you - they cost a fair bit so be warned they will cost about 1% of the purchase price, with a minimum charge depending on where you are looking.

- appoint someone with your power of attorney to sign the contract. Make sure it's an Aussie PoA.

- remember that you generally pay 10% on signing the contract, so someone will need to hold the deposit for you. Someone that you trust.

- you can appoint an attorney but that will also be an expensive option

- houses often look better in pictures than in real life.

[Sibella]

Don't do it, the look and feel of a house and area is very different from what it appears on photos.

Also if you have kids you really need to look at schools first?

Also remember your stuff takes six weeks to get here, might be enough time to buy a house if you want to do it so quickly.

We bought after three years here and even then it was reluctantly. It's really a big commitment.

[HansaPlease]

I also wouldn't advise it, purely on the basis that you might get here and realise you hate it. Or it has powerlines nearby. Or the neighbours are crack dealers then you're stuck with a house you have to sell at a loss.

What if you don't find jobs as soon as you would like?

I don't think that establishing a credit rating will mean much to be honest. I don't think it really works that way.

[Donovan83]

I can completely understand what you want (having a place you can walk into, stability, etc). I speak from experience when I say that you're far better off renting at first.

You never really know if you'll like a place until you've lived there. Rather save your deposit in one of the many high interest savings accounts and rent for a year - after a year, if you still want to buy and you're happy in Melbourne you'll be in a position to be knowledgeable about the areas you want to live.

Don't get caught up in the property spruiking and "fear of missing out" mentality. A year is worth the wait.

[Mara]

Absolutely - I personally, would never, ever, do it!

The biggest thing you will miss out on is the first home owners grant... other than that, I go with all of the above opinions.

You need to see the house in person, you definitely cannot depend on photographs.

Also not sure how you would get a loan in Australia if you are not living and working here, could be possible, but my thought is that overseas buyers usually put down the cash.

The only thing to build up your Australian credit rating is to get here and to then buy something. You could start with a vehicle, pay 50% of the asking price and take a loan for the rest. The finance places will fall over themselves to assist you. Once you have that, you are good to go. Just remember this, always ensure that whatever you apply for, be it a loan or a credit card, even if you decide not to take up the offer, will eventually make it's way to your credit rating.

[Eduan]

Hi

Thank you for all the personal feedback.

I find it interesting to note what people say that are actually in Oz

I recently received a mail from Migrate2Oz, which are one of the Migrating Agents, should you want to work through an agent

In summary, this is their view on this http://www.migrate2oz.co.za/buying-investment-property

[RedPanda]

I recently received a mail from Migrate2Oz, which are one of the Migrating Agents, should you want to work through an agent

In summary, this is their view on this http://www.migrate2oz.co.za/buying-investment-property

Hahahaha..! I'm sorry but after the first 3 seconds of reading that page I started mentally narrating the page in that hyper telemarketing voice: But wait! There's more! Order now and you will also get... Sorry, I'm still trying to shake the laughs... People should take a careful look at how the Aussie tax savings on houses work. I have found, after asking a lot of questions, that that is mostly for people who want to keep the property loan 'in debt'. It's for a continuously running expense scenario where you can't or don't want to put down a substantial bond and never plan on paying the loan back, until you sell the house again. Or you rent it out in perpetuity. It's not really a deal for someone who wants to pay off a 50% bond and then flatten the remaining loan asap. But I'm very sure one of our 'admin' things will be to book a meeting with a financial planner/adviser and get them to explain how the whole thing works, including scenarios with numbers.

Thanks for everyone who's given advice here, I really appreciate it. In the end we decided to not buy anything until we're on that side. We're still young, and we don't have children, so we can wait a little longer to get our house sorted.

The thing is, we don't want to buy an "Investment" we want to buy a home. And we don't work with credit, so the value of the house is rather irrelevant to us once we live in it.

I know we will need a loan from a bank to finance some of our house, and we will need a credit rating for that. But we can probably talk to our bank once we're there and work on a strategy to build a suitable rating. I know a car sales lady said we should consider the option of buying a car on a finance plan (we looked at the interest, it's very low) and pay the installments for a year, and then just pay the rest as a lump sum to get rid of the 'debt'. We'll figure it out. Like I said, we're not rushed yet. And we don't fancy the idea of having additional monthly obligations while we are still looking for work.

So we'll move, rent, scope, look for work, rent and work until the bank will lend to us, and then build. If it takes three years, then so be it.

[Mara]

Red Panda, that is exactly what we did. We bought a car, paid 50% of it, and financed the rest at a low interest rate. Gave us a wonderful credit reference. As time went on we got our credit cards, which we use all the time, we rarely pay cash or by debit card. The big thing is... we pay the credit cards in full every month, so no interest for us. This gives us a great reference as well. Just remember with credit cards, the more you have the worse your credit rating will become. Here is the scenario:

Credit card 1 - Spend limit of $10,000

Credit card 2 - Spend limit of $5,000

Credit card 3 - Spend limit of $2,000

Credit card 4 - Spend limit of $1,000

Total Spend Limit $18,000. When you apply for a house loan, they will often look at your credit card limits and for the sake of your cashflow they presume that you have spent the cards to the hilt and that you are paying of 10% $1,8000 per month on the cards. So you must ensure that you do not just apply for cards willy nilly.

Hubby and I have a good system. We each have two credit cards, but all four cards are on one account with one spend limit... which works for us.

[Eduan]

RedPanda & Mara, this is exactly what i thought the response will be, thx a lot!

It is just sad that this is the 'advice' given by the 'experts'

[RedPanda]

We'll talk to our bank, GenDemo is well trained by astute parents regarding exactly what you need to ask to get the deal that suits you the best, even if it takes 30min talking the banking personnel through it, lol. On this side at least they often allow you to do anything within the rules of the various packages, but nobody thinks creatively about things, so very often the staff themselves won't suggest the solution to your needs. (We, the whole family, also play lots of tabletop games. Banking is no different, know the rules, play the game. Play to win.)

Bottom line is that people should be honest with themselves about their spending habits, and then they also need to do the tedious calculations of various scenarios and actually look at what will cost them the least amount in bank fees and interest. We follow the philosophe "If you look after the pennies, the pounds look after themselves" and we've found it yields good results.

We might get credit cards on a linked account, if we need it for credit rating. But we'll ask about merchants' attitude towards credit cards vs debit cards, transaction fees, monthly fees, and the automatic monthly transfer options.

It irritates the living daylights out of us that the banking systems force you to have some kind of borrowing record. It was very frustrating when we wanted to get internet here the first time, because all the internet people also require that you have a credit record, regardless of paying them upfront as per contract each month! And the lady who helped us smiled and said:"No don't worry, it's not that hard, any account will help, like you know, an Edgars or Woolworths account, or like if you've bought a car." Expecting our faces to brighten up and us to go:"Oh, ja.. those, no problem!" Instead we told her we had no credit at all, had never opened any store accounts, and were each given a reliable 'student' car when we turned 18. It was obvious she had difficulty imagining how anyone could live without credit.

At least when immigrating we feel that there is some kind of excuse.

[Heather]

Hahahaha..! I'm sorry but after the first 3 seconds of reading that page I started mentally narrating the page in that hyper telemarketing voice: But wait! There's more! Order now and you will also get... Sorry, I'm still trying to shake the laughs... People should take a careful look at how the Aussie tax savings on houses work. I have found, after asking a lot of questions, that that is mostly for people who want to keep the property loan 'in debt'. It's for a continuously running expense scenario where you can't or don't want to put down a substantial bond and never plan on paying the loan back, until you sell the house again. Or you rent it out in perpetuity. It's not really a deal for someone who wants to pay off a 50% bond and then flatten the remaining loan asap. But I'm very sure one of our 'admin' things will be to book a meeting with a financial planner/adviser and get them to explain how the whole thing works, including scenarios with numbers.

Thanks for everyone who's given advice here, I really appreciate it. In the end we decided to not buy anything until we're on that side. We're still young, and we don't have children, so we can wait a little longer to get our house sorted.

The thing is, we don't want to buy an "Investment" we want to buy a home. And we don't work with credit, so the value of the house is rather irrelevant to us once we live in it.

I know we will need a loan from a bank to finance some of our house, and we will need a credit rating for that. But we can probably talk to our bank once we're there and work on a strategy to build a suitable rating. I know a car sales lady said we should consider the option of buying a car on a finance plan (we looked at the interest, it's very low) and pay the installments for a year, and then just pay the rest as a lump sum to get rid of the 'debt'. We'll figure it out. Like I said, we're not rushed yet. And we don't fancy the idea of having additional monthly obligations while we are still looking for work.

So we'll move, rent, scope, look for work, rent and work until the bank will lend to us, and then build. If it takes three years, then so be it.

Hi I am a mortgage broker and can help you even if you are buying in Melbourne. I live on he Gold Coast in Queensland but have helped many people on this forum get their first homes all over the country. You do not need a credit rating. Basically, the day you arrive and you get your first rental, your credit rating starts. You most definitely do not need a credit card, nor do you have to have a car loan. How we work as mortgage brokers (what the banks want) is that the client has a good deposit ( 0r 5 % with genuine savings over three months)(if you are a permanent resident or if you are temporary, this will vary), if they have good jobs and are off probation (one lender will do probation if you are in the same industry you were in before) period and can provide two recent payslips, drivers licence, passport and visa page. They will do a credit check and the fewer enquiries you have on your credit history the better. Some people do not know this and they go shopping around for a good deal with a dealership (car) or to different banks for home loans, each time you give them your basic details and ask them to give you an offer, they do a credit check. Some of the banks do what they call, credit scoring, if you have more than 3 hits on your credit history some banks will not look at your application, some its as little as 2, they do vary. Some lenders do not do credit scoring so it doesn't matter how many but they will ask you the outcome of all the credit queries.

Remember, Mortgage Brokers can shop around for the best deal for you, most of the big 5 lenders are not comparable to the smaller building societies and smaller banks at the moment. The smaller lenders are offering rates as low as 3.99% - Hope this helps (dont go getting credit cards, car loans etc)