Wednesday, May 02, 2012

Another Meeting with the Lender

Back in February, we met with a mortgage lender at Commonwealth Bank. He told us that we need to have a reasonable sized deposit on deposit for three months in cash in a single account before we could be preapproved for a loan. We've now had the deposit for about 2.5 months and it is growing (now $A92k) so we set up another meeting for yesterday. He seemed a bit surprised by the credit limit on the credit card in Snork Maiden's name $A20k and other details of our finances. I guess there aren't many first time home buyers coming in who are as wealthy as us.

One interesting thing that came out of the meeting was that since Snork Maiden is a lot younger than me we can get a 30 year mortgage probably. That would reduce the payments on a 90% loan for an $A800k house to $A4,500 per month from near $A6,500 for a 15 year loan.* That sounds a lot more affordable - about 25% of pre-tax income - my ideal would really be to not ever pay off the loan so that is getting there :) It's interesting that he didn't run any numbers by us at all though apart from briefly mentioning the maximum he thought they could lend us. Those are my calculations using SOLVER in Excel. He was more interested in selling us car insurance for $10 a month cheaper than our current provider. We did discuss variable versus fixed rate loans. You can get up to a 15 year fixed rate loan here now, but the interest rate is much higher than the current rate on a variable rate loan.

Anyway, he's working on the pre-approval at the moment and we should hear in a day or two.

* The median house in our city is $A550k.

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