Pete and Julie met at Newcastle University and have been together for five years. They both graduated three years ago and have plans to marry early next year.
Julie studied nursing and now works as a permanently employed nurse in a private hospital. Pete was lucky to pick up a cadetship at the start of his third year of study. Although it extended his study time by a year he was able to impress his employer during his cadetship and he graduated into a good full-time job with them as a mechanical engineer.
Two years ago they moved into a rented apartment together and started saving aggressively towards their goals of getting married and buying their first home. They have been really good at prioritising and even though they have an active social life with their friends they have been able to save $57,000.
- Upcoming Wedding
- Purchase Land & Home Package; Newcastle-Maitland Area
- $550,000 to $575,000 budget for property purchase
Pete and Julie they both qualified for the First Home Buyers Assistance Scheme which meant they would pay no NSW Government Transfer Duty if the value of the home they buy is less than $650,000. If they purchased within their price range this scheme would apply to them!
We also advised them they would qualify for an additional $10,000 grant under the First Home Owner Grant (New Homes) Scheme. We highlighted how this could be used to pay the Lenders’ Mortgage Insurance Premium, allowing them to borrow up to 90% of the property value instead of having to save a further 10% deposit to keep the loan within the traditional 80% of value limit.
When we worked through their finances we identified Pete’s HELP debt. When Pete started his cadetship, his employer began paying all his uni fees from that point. That helped to reduce his study debt to $21,000 and through compulsory repayments over the past few years he now only has a HELP debt of $15,000.
Julie on the other hand had applied for and received a partial scholarship to offset 50% of the cost of her nursing degree, and her parents covered the balance of the costs so she has no debt relating to her study.
They also had credit card with a limit of $12,000 (which never got beyond $6,000 and was paid off in full each month). Despite paying this off each month, this high limit would be calculated in the loan applications and would cause them to fall a little short of the Mortgage Insurer’s servicing capacity requirements.
The credit card issue was easily solved by reducing the limit, but the HELP debt was still a problem.
Both First Home Buyers
Pete’s HELP Debt
10% + Deposit Savings
High Credit Card Debt
- Apply for First Home Buyers Assistance Scheme
- Stay under $650,000 and purchase NEW home for the First Home Owner Grant (New Homes) Scheme
- Reduce Credit Card Limit
- Reduce HELP debt
In brainstorming solutions Julie advised us that both of their parents had promised them gifts of $25,000 each to cover the wedding costs. We discussed ways they may be able to scale back a bit on their on their wedding costs, and direct some of the gift towards repaying Pete’s HELP debt.
Three weeks later Pete and Julie made an appointment to get their loan application underway. Pete said he had reduced the credit card limit to $6,000, and they had chosen the house and land package, with the builder agreeing to reserve the lot for 2 weeks with a refundable $1,000 holding deposit while they sorted out the finances.
They had decided to go with the garden wedding idea, and had identified cost savings of $10,000 in venue hire, self-catering the alcohol, finding a new caterer for the meals, hiring a DJ instead of a live band, and trimming the guest list a little (they hardly ever saw their second cousins anyway). Pete’s parents had agreed to increase their gift by $5,000, and had already paid out Pete’s HELP debt as part of the gift (the balance would go towards the reduced wedding costs).
Pete and Julie had gathered all the information we had advised them they would need to proceed with the finance application, and we were able to obtain the loan approval for them within a week. They have now signed the contracts for the land and construction, and plans have been submitted to council with the construction expected to start in around 6 weeks and be completed a month before their wedding.
With a little bit of extra support from their family and a willingness to compromise a little on the wedding plans, Pete and Julie were able to achieve their goal of home ownership.
With their openness and creative thinking, being able to work through things together with Excel Financial Advisors Julie and Pete had a beautiful wedding with all their friends and family AND got the house and land package in they were after (a little closer to Maitland than Newcastle but Pete isn’t complaining).
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