Why is it that Bobo and I, with a combined income that exceeds the GDP of some third world countries, can’t get a mortgage?
In the UK I was looking into buying property a few years ago and the banks and building societies were falling all over themselves trying to give me huge piles of filthy lucre. Here in Australia I phoned the bank (who I have been with for over five years now) and they didn’t want to know me.
So I have been ringing around banks, finance companies and mortgage brokers and am getting the same message from all of them – come back when you have ten percent of the purchase price as a deposit. Not to mention the other five percent of the purchase price you will need to pay your conveyancing costs, legal fees and the extortionate amount of stamp duty that the state government requires. The strange thing is that this only applies if the purchase price of the property is over $400,000. That is a little strange to understand, so let us do some sums;
Scenario 1;
House Price: $400,000
Buyer needs Deposit (5%): $20,000 + Fees (5%): $20,000 = $40,000
Scenario 2;
House Price: $405,000
Buyer needs Deposit (10%): $40,000 + Fees (5%): $20,000 = $60,000
This means that for an increase in the property price of $5,000 (or 1.25%) the unsuspecting house buyer needs another $20,000 (or 5%) of the purchase price. The world of finance is a mystery to us all.