My fiancé and I are getting married at the end of next year and are hoping to buy a house mid next year. We are wanting to find out if we are eligible for a first home loan in our current situation, or if my fiancé would be eligible on his own (I will explain why).

Citizenship and background:
I'm a Norwegian citizen and have been in Australia since July 2005 on a full-time student visa. I recently got granted a visa 461, which allows me to stay in Australia for 5 years at a time (then need to renew) with my New Zealand citizen partner with full work rights.
My fiancé is a New Zealand citizen and has lived in Australia since March 2006. He is not eligible for Australian citizenship.

Employment & Salary:
I'm currently studying full-time; I will start looking for a job at the end of this year, but obviously don't know how long it will take to find one or how valuable my work experience will be at the time of applying for a loan considering the short time of employment (6 months). I am also considering starting my own photography business, but not sure how much I would earn doing this as a full-time or part-time job.
My fiancé works as a restaurant manager and makes approx. 42K per annum.

Debt & Rent:
I have a $120K student loan with my Norwegian student bank that I will start repaying in July 2011. Other than that, I have no other loans or debts. My fiancé does not have any loans or debt. We own a credit card that is connected to our debit account so we never use it for credit as such.

Current living situation:
We have been living together in three different apartments/houses since 2006, and currently live in a house where we have been since June 2008. Our apartments/houses have ranged from $270 (first apartment) to $300 (current house). We have always been on time with our payments, but not sure if we could prove this other than with a statement from the current house owners.

Current & Future Savings:
We currently have $25,000 in a high interest account that we opened at least a year ago (can't really remember). However, we are setting aside around $15,000 for our wedding, so there would only really be $10,000 left of savings.

In all, we have approximately $10,000 dedicated to our home loan at the moment, but we are hoping that with 6 months of two incomes we might be up to $15,000 by time we are ready to apply.

Home we are interested in buying:
We are hoping to buy a 2-3 bedroom unit in or around the Goodna area outside Brisbane (QLD). The houses that we have seen that we like are around $250K to $300K.

Other relevant information:
I have two cousins that are Australian citizens - would either of them be eligible to be guarantors?


What we would like to know is:

1. Would we qualify for a 95% or 90% loan in our current situation, or in our double income situation we'll hopefully be in by mid 2011?

2. Would we be able to use my cousins or my fiancé's NZ parents as guarantors?

3. Would my fiancé be in a better situation to apply for the home loan in his name only considering my (non-)employment situation?

4. If the above answers are not in our favour, can you suggest any other solutions to us being able to buy our first home in the next year, and if so, how much is the maximum we could aim to loan?


Thanks in advance!

Yes this is a complex situation! Firstly in reply to your questions:

1. Would we qualify for a 95% or 90% loan in our current situation, or in our double income situation we'll hopefully be in by mid 2011? To qualify for a 95% loan you must be on a type of Visa where the government cannot deport you. I am not aware of the specific details of the Visa that you are currently on. If you were engaged to an Australian citizen then it would be no problem however to a NZ citizen I am not 100% sure as to how the government treats that. For a 95% loan you must have been in your job for 6 months, ideally 12 months for your income to be accepted. A 90% loan would be available if you have just started a new job, can prove that the risk of being deported is low and that you have 5% genuine savings.

2. Would we be able to use my cousins or my fiancé's NZ parents as guarantors? Only properties in Australia can be used for a security guarantee (the type of guarantee you need). So if the NZ parents have a property here then that is ok. If your cousins own a property which has significant equity then that would be ok as long as you have 5% genuine savings. Whenever a guarantor is not a parent then genuine savings may be required.

3. Would my fiancé be in a better situation to apply for the home loan in his name only considering my (non-)employment situation? At present yes, however his income may not be sufficient to get the home you are after. We would need to complete a full assessment to be sure.

4. If the above answers are not in our favour, can you suggest any other solutions to us being able to buy our first home in the next year, and if so, how much is the maximum we could aim to loan? See below

I would recommend that you do the following:

* Move your savings to be in your fiance's name only. This way if he does buy on his own then the savings will be accepted as genuine. Savings in joint names are not accepted for a loan in one name.
* If you are happy to apply for a small loan then he may qualify on his own now for a 95% loan.
* If you want to buy in both names later on then a 90% loan would be ok, assuming we can look into the details of your visa and confirm the risks.
* Save as much as you can!
*Consider asking your parents if they can gift / loan you a deposit so that you only need to borrow 80%. Then you would have no issues obtaining a loan.

It isn't easy to get into your first home, you may have to buy a smaller property or work very hard to save as much as possible. The problem with your situation is the combination of several small issues. When they are added together there is no easy solution that overcomes all of them.

_________________
Otto Dargan
Mortgage Broker
Ph: 1300 889 743
The Home Loan Experts

Our most popular pages:

• Credit Score Calculator: Do the banks see you as a high risk borrower?
• LMI Calculator: Do you qualify for discounted LMI?
• Genuine Savings: The biggest hurdle for first home buyers.
• Employment letter, Accountant letter & Gift letter templates

New Zealand Citizen Family Relationship (Temporary) Visa (Subclass 461)

I have just completed researching this visa and from my understanding this visa would be considered the same as a Spouse (subclass 309/100 and 820/801) visa from a lending point of view.

It appears you would qualify for a 95% loan once you have been in your job for > 12 months OR a 90% loan once you have been in a new job for as little as one day. I would strongly recommend that you go for a 90% loan as 95% loans are very tough to get.

_________________
Otto Dargan
Mortgage Broker
Ph: 1300 889 743
The Home Loan Experts

Our most popular pages:

• Credit Score Calculator: Do the banks see you as a high risk borrower?
• LMI Calculator: Do you qualify for discounted LMI?
• Genuine Savings: The biggest hurdle for first home buyers.
• Employment letter, Accountant letter & Gift letter templates

Thank you so much!

When you say a "smaller loan", what amount would you suggest?

And if my partner moves the savings to an account in his name only, how long must the money have been in that account before it's considered genuine savings for loan purposes?

Also, is the $7K first home loan grant available to us?

Indicatively the loan would be around $200,000 if he applied on his own. We would need his full details prior to completing a full assessment to give an accurate figure.

The savings account in his name only should ideally have at least 5% of the purchase price in it. 3% would be the minimum, however 5% is ideal.

Yes it appears you would be eligible for the First Home Buyers Grant (FHOG). The criteria are quite complex so please refer to your state government to be sure.

_________________
Otto Dargan
Mortgage Broker
Ph: 1300 889 743
The Home Loan Experts

Our most popular pages:

• Credit Score Calculator: Do the banks see you as a high risk borrower?
• LMI Calculator: Do you qualify for discounted LMI?
• Genuine Savings: The biggest hurdle for first home buyers.
• Employment letter, Accountant letter & Gift letter templates

Thanks again. Is there a minimum time that the savings need to have been in his account before applying for the loan?

Yes, 3 months as a minimum. He must also be adding to the savings to make them as high as possible. Some lenders (only a few) require 6 months.

_________________
Otto Dargan
Mortgage Broker
Ph: 1300 889 743
The Home Loan Experts

Our most popular pages:

• Credit Score Calculator: Do the banks see you as a high risk borrower?
• LMI Calculator: Do you qualify for discounted LMI?
• Genuine Savings: The biggest hurdle for first home buyers.
• Employment letter, Accountant letter & Gift letter templates