Barbara Delissen and her partner, Craig Kilburn, met about seven years ago, when she came to Australia on a backpacking holiday.
Names Barbara Delissen and Craig Kilburn
Occupations Editors
Income $80,000 combined
Investments $23,000 savings, including about $17,000 in the Netherlands.
Debts None
Superannuation $15,000 combined
After several years working in her native Netherlands the couple, both in their early 30s, now want to start a family and buy their first home in Melbourne.
Delissen says ideally they would buy before having a baby, but it may not be possible to juggle mortgage repayments on a single income. In the meantime they are saving as much as possible by making do with an older car and foregoing mobile phones.
"We like going out for dinner every now and then, but we try to go somewhere that's in the Cheap Eats guide," she says.
Adviser Jamie McKay is the director and authorised representative of Heraud Harrison.
Strategy Delissen and Kilburn currently have an annual savings capacity of about $17,000, allowing for living expenses including $12,000 in rental payments. Over the next 12 to 24 months, while they are looking to purchase their own home, we recommend they direct 100 per cent of their savings to their existing ING Direct Savings Maximiser account.
Given the short-term nature of their goals, they should not take on market-related investment risk or lock their capital into inaccessible term investments.
Once they are ready to purchase their own home, we recommend they transfer all cash holdings from the Netherlands to Australia to maximise the size of their deposit. To manage periods when they are on a reduced income, their mortgage arrangements should be as flexible as possible and allow for the lowest possible minimum mortgage payments. The mortgage should have sensible minimum redraw levels and ideally no redraw costs.
Assuming the purchase price of their home is $325,000, they would face stamp duty of $15,160 plus legal and moving costs.
After 12 months of saving they should have a deposit of $40,000. Provided they are also eligible for the Federal Government's First Home Buyers' Grant of $7000, they will require a mortgage of about $300,000. This will also give them a cash buffer of about $5000 for emergencies. A $300,000 mortgage at interest rates of about 7 per cent over 30 years would have fortnightly repayments of $920 or $23,920 annually.
This is within their savings capacity of $29,000 a year once they are no longer renting. We suggest they direct all of their savings towards their mortgage repayments to reduce their total non-tax deductible debt as quickly as possible.
Under current policy they could benefit from the Government's maternity payment of $3042 when they have a baby.
They could also take advantage of the Government's super co-contribution initiative by making personal undeducted contributions of $1220 combined, to which the Government would add $1830.
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