The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1297 FIRST HOME BUYERS: EARN ENOUGH TO BUY A $500K PROPERTY WITH JUST A $25K DEPOSIT - HERE'S HOW
What if you could buy your first home in one of the most sought-after areas with just $25,000 in the bank? Join us as we uncover the secrets to achieving this with insights from Zac of Shore Financial. We discuss what it truly takes to borrow $500,000 and the feasibility of turning your new home into a rental property. Learn about the first home buyer guarantee scheme, potential interest rate drops, and how long first-time buyers typically stay in their initial homes. Our rapid-fire segment reveals the practical and financial realities for young buyers eager to enter the market.
In another compelling discussion, Zac Constantinou from Shaw Financial shares expert property investment tips designed for first-home buyers. Discover strategies like maximizing the first home buyer grant by partnering with family or friends, and why time in the market is more valuable than timing the market. We also touch on varying mortgage pre-approval timeframes and the importance of acting swiftly on opportunities, especially for properties in the Dee Why area. Equip yourself with crucial advice to navigate the property market successfully and share this episode with other aspiring homeowners in your network.
go and good morning, good morning first home buyers. You may think that if you've got $25,000 in your bank account that you cannot buy a property on the northern beaches are one better, and we're going to test that theory this morning. Stay tuned.
Speaker 1:We're with mortgage broker expert Zach from Shore Financial and Billy, the first homebuyer ring leader good morning that's the signs of a first time by many generations ago we were, uh, we were just talking off here about our, uh, our hairlines that we don't care about, but we actually do, but we don't, but we do. But anyway, that's another topic for another time that's it, good morning.
Speaker 3:Yeah, how are you now?
Speaker 1:zach zach, you're from shore financial, you're out there, uh, you're guru swami, uh mortgage broker in dy and you're seeing activity at the lower end price range out there. Please explain.
Speaker 3:Please explain. Well, that's exactly what's happening. There's a lot of people coming out of the woodwork. I think there's a bit more confidence in wanting to know what you can borrow, therefore what you can buy at the moment. Wanting to know what you can borrow, therefore what you can buy at the moment, and the demographic of young and hungry first home buyers. It keeps getting more exciting. I guess there's 18, 19, 21, up to 25-year-olds reaching out that are wanting to know what their capacity is, and they might be on between $50,000 and $80,000, up to $125,000. And it obviously varies what they can buy for, obviously with their deposit as well. But yeah, income equals borrowing capacity. To put it simply.
Speaker 1:We're going to play a game this morning where you've got to give one sentence answers and we're going to throw Billy and I are going to throw 12 questions each at you sequentially. Are you ready for it? Hit me First home buyer extravaganza. Billy, what's your first question?
Speaker 2:How much does a first home buyer need to earn to borrow $500,000?
Speaker 3:Around $110,000. Far out.
Speaker 2:That's a lot of money.
Speaker 3:So to borrow $500,000, to borrow $550,000, that sort of reaches the cap of what the first-time buyer grant offers or the first-time buyer guarantee. So to be clear, the national scheme allows you to buy with a 5% deposit. Yep, if you're buying a $600,000 property, that means that you know at a minimum you'll deposit.
Speaker 1:You got one sentence at this. You went way over.
Speaker 3:It sort of rolls into the whole lot. Okay, next question Go so $110,000.
Speaker 1:Can a first-home buyer rent out their property.
Speaker 3:After they've lived in it for a period of 12 months.
Speaker 2:Within 12 months, if I buy for $550,000 and I rent it out and it's getting $500,000 a week hopefully that's easy maths for you how much will my mortgage be after it's rented out? Rough numbers.
Speaker 3:How much would your mortgage be after you's rented out? Rough numbers how much would your mortgage be after you rented it out net what?
Speaker 1:do you need for payments?
Speaker 3:that that's a bit of a one sentence that's a question up to you. How much of the rent are you putting into the mortgage?
Speaker 2:five, five hundred a week rent and so twenty twenty five k more sooner.
Speaker 3:Yep, so you can find 500.
Speaker 1:Get out your calculator for this one.
Speaker 2:Do you want a calculator?
Speaker 3:So you're going to have another 25k in mortgage repayment in income. So, you're going to take another 25k off your mortgage. So what's?
Speaker 2:No, no, no, what's how much.
Speaker 1:Repayments minus rent.
Speaker 3:The repayments on a 500 grand mortgage, say, at 6.04% now they'd be around $3,000 a month.
Speaker 2:Okay, and then you've got how much You're going to have 3,000 times that.
Speaker 3:divided by weeks, let's say, it's about 625 a week.
Speaker 2:With your rent coming off that, it could be around 500 a week, so you're not far off A couple hundred a week.
Speaker 1:So the answer a couple hundred a week. Whose is the next question, mine or you, billy?
Speaker 2:You.
Speaker 1:When will rates come down for first-time buyers?
Speaker 3:Yeah, Well, I guess, when they come down. They come down for everyone, not just first home buyers. There's a bit of a lag for the banks to pass on. Any rate, movements say around two to three months from when the RBA moves. The RBA might move as soon as November, but it's more likely between February and May next year, which will be the first RBA meeting from February 2025.
Speaker 2:What's the most popular first home buyer grant at the moment?
Speaker 3:Well, a lot of people are going for the first home buyer guarantee because you look at the length of time on average to save a deposit versus what you need to get into the property market. If you've already got properties, you would generally need a 20 20 deposit to get a decent rate, but the first time buyer guarantee allows you to purchase for a five percent deposit. So, as I said before, six hundred thousand thirty grand, you could probably save that in a year or two if you're living with your parents and you're on the average wage in australia. Good, answer.
Speaker 1:Do first-time buyers live in their properties in terms of short to long term, or do they leave them rented out and go and stay with buddies or parents?
Speaker 3:I'm pretty sure the average sale after the first home transaction is around seven years after. It's like 7.6 years after they've purchased their first home is when they sell, or maybe they, you know, purchase another one or they upgrade, obviously dependent on what their goals and objectives are and what the market does, but it seems that that's it, that that's the time frame for them to hold on to their first property.
Speaker 1:Do they generally, because you're the mortgage broker doing the loads. Do you find they end up sort of living in the place or do they end up just buying that first home and leaving it as a rental investment?
Speaker 3:I think I've definitely seen a few more rent investors, so people that are buying like out of out of area, out of state at the moment. But more traditionally people have just stayed in that, like they buy their first time, they live in it and then, you know, two, five, seven years down the track they've then got these options after they've paid down their mortgage and maybe they've built equity and grown their incomes have more borrowing capacity.
Speaker 3:So they might have a bit of a family and they want to upgrade. So it seems to be around that time that they've lived in it and then they leave.
Speaker 1:So, guys, if you've just tuned in, we're talking to Zach from Shaw Financial about first-time buyer activity that it is possible to buy with a $25,000 deposit, and we're throwing short, sharp questions at him and within one sentence he's answering these. A couple more minutes we've got of this, billy.
Speaker 3:First-time buyers using their superannuation to buy property much yeah and I feel like more people are getting informed about that the first-time super saver scheme where you can use pre-tax deducted income from your employer up to $50,000 for three years. Provided it's for the purchase of your first home, you can access that as a deposit. So the benefit there is that yeah, very clever, very clever.
Speaker 1:Everyone should be doing that Everyone. There's no reason why they should be paying tax on the deposit, on the huge tax rates on the deposit that Everyone. There's no reason why they should be paying tax on the deposit, on the huge tax rates, on the deposit amount, exactly.
Speaker 3:Your question.
Speaker 1:It's a real estate. I have a question. I'm asking a broker. I'll ask this to both of you guys Can you buy property in DY on one-bedroom unit for the ridiculously low price of $500,000?
Speaker 3:I think I saw one that was what $496,000, one-bedder over near Lismore Ave.
Speaker 2:Yeah, there's been four transactions under $550,000 in the last sort of six months and I'd say another couple within 12 months. The problem here is that pre approvals last for 90 days. Yep, first home buyers are looking for a needle in a haystack, but the needle is there, so they need to be ready. It's there okay. I love that yeah, they need to be ready. Um, can you just cue a constant, you sort of cycle of pre-approval, if you've sort of struggled to?
Speaker 3:get the? Yeah, we can extend it. It's just to take a position on. You know, after that 90 days, is their income still the same? Have they still got the same deposit? Is their financial scenario still consistent with the original application? Then just reapply, make sure that it's still the most competitive and extend them for another 90 days and the banks don't look at you and go.
Speaker 2:Why didn't you buy? You're weird. 90 days is up, no more.
Speaker 3:It's always the question. But as long as their financial scenario is the, same or better, then there's no issues with extending the approval. There you go.
Speaker 1:Okay, final question the approval. There you go. Okay, final question, I'll ask one. You ask one, billy, my. My final question is what is the winning attitude of a first-time buyer? You know, I know, and just to expand on that, you know when, when you're acting for a first-time buyer and you're like man, you're a legend. How good are you, what? What does that attitude look like?
Speaker 3:I think they're proactive, prompt and they want to understand the process.
Speaker 3:Like it is the first purchase it's likely their first loan unless they've had car loans or personal loans or credit cards. So there might be, you know, a bit of interest that they show in what their mortgage is set up to do. What are the features, what does it mean? And I can safely say that every first home buyer I have had has showed that interest in wanting to know the ins and outs in intricate detail of what their capability to buy a home is.
Speaker 2:Billy final question Does dual first-home buyers require a five-day call-off? Can they go unconditional?
Speaker 3:Look, once you're pre-approved, you can put your hand up at auctions. You can make offers subject to. It depends on the property, really like if they haven't been able to take a property off the market prior to auction and they go to auction, obviously you buy at auction. It's unconditional, yeah, so it's really one of those. It's a risk, but it's. It may not be a risk in terms of the property being subject to valuation for formal finance approval. We're not seeing many valuations come in under, if at all. So generally they meet the contract price, which is what the market might pay for it at um at auction.
Speaker 3:So it's no different to any other buyer I always advise my, my first home buyers to go for the cooling-off period, because it's conditionally approved and the conditions are generally subject to valuation and there might be some other things dependent on their specific scenario that can be addressed but might take a little bit of time, but the valuation is a key thing. That happens within 48 hours to five business days after I provided a signed contract. Yep, um, so yeah it's a risk but it doesn't really, you know.
Speaker 1:Read its head, as you know, being an issue interesting there you go ladies and gentlemen, uh, thank you for watching zach constantin, you, constantin, you, constantinou. He's at Shaw Financial. Look him up, google him. If you want any help with mortgage-broking stuff. He's an absolute weapon, him and the team at Shaw Billy has done this first-home buyer jiggle that you're talking about. And don't forget that if you don't have the income, you can always pair up with a brother or a sister or a friend and buy something under the first home buyer grant together with someone. Better than half than nothing sometimes. So, Zach, anything else you want to add?
Speaker 3:I think it was Billy that told me that it was time in the market, not timing the market as a bit of a philosophy for when he bought his property.
Speaker 2:That's a great saying.
Speaker 1:Yeah, it's true. Aye, so it's not timing, i-n-g, it's T-I-M-E hyphen. I-n time in the actual property market that you own a property. Billy, before we go, anything you want to talk about?
Speaker 2:just quickly how long is a pre-approval taking?
Speaker 3:depends on the bank.
Speaker 2:48 hours to a week pretty quick, there you go, so good.
Speaker 1:I've got to tell you, when I talk to mortgage brokers and they say depends, it always really frustrates me. And I was expecting about 50 depends today and I only got one or two of them. So you smashed it today, zach.
Speaker 3:You smashed it oh thanks for smashing the questions guys hope this helps you today.
Speaker 1:Forward it to any friends or family that are first-time buyers that may be able to help and give us a call, because there are properties you want to position yourself to be ready for in dy one bedrooms, circa 500 000, which means you're on you. Thanks, billy.