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[VIC ] House and Land Finance questions

Discussion in 'The Pub' started by Jesterarts, Jul 26, 2010.

  1. Jesterarts

    Jesterarts Your freedom ends where mine begins

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    Morning all,

    I'm looking into building a place in the near future have a few things I would like to see if anyone can clear up.

    We're doing a house and land package in VIC South East.

    1. Is stamp duty calculated on just the value of the land or the total of the land and the house I will build on it?

    2. I have savings of the value X in my bank account, this value is the 20% deposit I need to not pay mortgage insurance. But, to secure the land I need to give them a 5% deposit on it. This means that what is left in my account after it not quite the 20% of the loan value. What I want to know is if the deposit I put on the land count towards the my overal 20% loan deposit?

    3. My fiancee and I are first home buyers and building. My understand is that we therefore quality for the First Home Owners Grant ($7,000) and the First Home Bonuse ($13,000) as out property will be less than $500k. Is this correct?

    That's about it.

    We've already seen the finance guy at at the builder and he was very confident we are well and truely in a position to buy now, but we are also having a independent financial advisor come out to us this week to talk it over with someone external.

    But I'm impatient and thuis posting the questions on here.

    Also, if anyone has built and knows of any other questions I should be asking, please post them up too.

    Thanks in advance.
     
    Last edited: Jul 26, 2010
  2. Calaber

    Calaber Nil Bastardo Carborundum

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    Jester

    I'm going to assume that Victoria is similar to NSW here.

    1. The stamp duty applies to the whole cost of the initial contract. If you bought the land first, then built on it later, you would pay stamp duty on the land, then stamp duty on the contract for construction later. If you buy a "house and land" package, you pay stamp duty on the whole deal. Depending on the tax structure in Victoria, I think it might be cheaper to buy the land first, then build on it after all costs for the land have been met. I have to stress that I can't be sure of this because of the differing state laws.

    2. If you are buying a package, your 20% counts towards the whole loan so you should be able to avoid mortgage insurance. Your equity in the land should be counted as part of the property value, so your loan to valuation rate (LVR) should remain constant.

    3. As I have never qualified for the first home buyer's grants, I can't help with qualifying upper limits. Maybe a younger member of the forum, or one of the more experienced property owners on this site can help.
     
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  3. minux

    minux Infidel Bear

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    Im staying away from this :p

    Only thing I will mention is, in Vic, stamp duty is waived for FHB for off the plan construction.
     
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  4. Jesterarts

    Jesterarts Your freedom ends where mine begins

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    Thanks for the input.

    I've done some more chasing around today.

    1. Yes I will be buying off the plan, thus the finance guy worked out the stamp duty to be like 9G odd. Thanks Craig.

    2. Thanks Calaber, I have confirmed what you have said to be correct! Win for me! otherwise i would be saving for another few months.

    3. It seems that I will be eligable for 20G of grants, but I don't really care about this. I can afford the house easily without it so it can be an added bonus down the track... funds for a car. :p

    At this point, my fiancee and myself have decided to go ahead with our plans. We are just going to wait for the next land release and get in on it. We suspect that the market may slow considerably in the near future but we are not in it to make money, we're in it for a nice place to leave.

    Hopefully in about a months time I will be posting up some pictures of a patch of dirt... :p

    Thanks again guys.
     
  5. minux

    minux Infidel Bear

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    Jest, for you, my main concern would be chinas slow down and the US looking to enter another recession. We are entering the 2 year lag period behind the US. I would be worried about paying 350k for something thats truly worth 250k. Make sure also you budget worse casse scenario, I always make sure before any purchase I know that I can repay a property with no tenats at 12% rates.
     
  6. Jesterarts

    Jesterarts Your freedom ends where mine begins

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    Yeah, I'm calculating for worst case scenario that we can make repayments even if rates hit as high as 12%

    I usually budget 10% and that is no worries, 12% would be pushing the boundaries of managing repayments souly on my salary.

    And if property prices where to fall 100k on our property, we would only be 20k in negative equity worst case... which is a situation I have the resources to bail us out of.

    But yeah, thanks for the advice. We're being fairly cautious and concervative in out approach to this and always budget for worst case. So we should be right *fingers crossed* :)
     
  7. Reaper

    Reaper Tells it like it is.

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    Whilst I agree it's great advice to look at the worst likely case senario the Australian market is very different to most other world markets. In Victoria especially we have a shortage of housing. Victoria has been steadily building approx 10 - 20% less than the underlying housing requirement for the last 5 years thus the chances of a housing market collapse a-la USA are highly unlikely as there will always be significant demand for the sort - medium term. I would expect the most likely outcome is a flattening out of the housing market rather than a wholesale decline in the event of recession.

    Victoria has an underlying requirement of around 50 - 60,000 dwellings per year and currently we are around 45,000 dwellings below "capacity". This means at best it will be 2 - 3 years to catch up before we see an oversupply however I would suggest it's much longer and could be 10 or more years as there is no sign of the levels of building during the last boom that ended approx 6.5 years ago.

    Reaper
     
  8. minux

    minux Infidel Bear

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    Reap, you sound exactly like the real estate guys did in the US and the UK before the property **** hit the fan and exactly what the real estate guys here are peddling.

    I only offer advice that is given to me from our financial planner/advisor, who to date, has been spot on in everything he has told us. :)

    As I said, however, it is only a concern and on this advice we will not be looking at any residential property in the foreseeable future.
     
  9. Calaber

    Calaber Nil Bastardo Carborundum

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    I would have thought that Jester is in a reasonably good position if he has the 20% already accumulated, is not reliant upon Federal or State grants to enable the deposit to be met, is realistic in his purchase goals and is not trying to sell a house before buying another.

    In NSW, we see real estate prices being somewhat depressed at present and I assume that is typical nationally, for certain sectors of the home market. First home buyers homes are suffering more than most, particularly in typical first home owner suburbs. Mid level homes have also dropped, and their market is not as fluid as it has been in better times. Top price homes? Well, when you have millions to spend on a home, the hip pocket is not so sensitive to interest rates and inflation. They still fetch record prices.
     
  10. CSP

    CSP Banned

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    The only thing different in Australia though Craig, is that our demand is still outstripping supply. That's a fair significant difference between Australia and the UK. While I agree we're definitely in times to be very very cautious, I don't think we'll see crashes the likes of the UK and the USA. Also from advice I have had.

    Either way, if you're talking about buying something to live in long term then affordability should be the main concern. I just bought a new place to live in back in May and apart from that have no other real estate investments at the moment as I'm being cautious. Even if there was a brief (in real estate terms this can be years) period of negative equity, my live in place is a very long term investment.
     
  11. Jesterarts

    Jesterarts Your freedom ends where mine begins

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    Yep, that's the mentality we are going into this with. We're getting a place that is big enough to accomodate a family in when that time comes and are planning on living in it a while.

    Thus why we decided to buy something a bit more expensive than we originally planned because our plans for how long we will be staying there have changed.
     

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