Buying a house in the future, looking for some advice (Sydney, Australia)

Worker48 · 18 July 2016 at 7:47AM

We are currently renting with savings but also debt (combination of student debt, car loan and credit card) we both have very good jobs in the CBD and would like to buy in the outer SW Sydney.

To avoid any confusion, both our jobs are in Sydney CBD because despite looking in cheaper areas around Australia, it is where we will have the most secure jobs. Our industries wouldn't allow us to move to a cheaper area. We are however happy to live outside of the CBD, we currently commute about 2.5hrs a day, which isn't a problem for us.

At this moment, we have a fairly aggressive savings plan, we are going to move out of our rental in 4 weeks and in with my partners mum. She has a huge house and we've put enough thought in to it, that I don't feel this is a concern as long as we have a fixed time (6-8 months). We've had a discussion about contributions and expectations ect.

The issue at the moment is I am conflicted at the moment as to where to put our money.

Our income $140,000 PA (before tax)
Our savings $72,000
Debt combined $57,000

Our monthly expenses are $2,300 (not including rent)

We're looking at buying around the $450,000 mark.
Upfront costs would be $18,000 (stamp duty ect.)
Deposit: we could easily have 10% BUT unless we have 20% or more, we have to pay Lenders Mortgage Insurance. LMI would be $4,880 on top of the loan amount.

The debt is all mine, I have a degree (and subsequently the higher paying job) and the car. My partner has savings, lower paying job and uses my car. We have discussed before, putting the savings in to the debt, paying it all out and starting fresh. If we lived with his mum for 8 months we'd easily get back to where we started, debt free and a 10% deposit.

I personally didn't like the idea because I feel my debt is my responsibility so I've been making the repayments myself, even though my partner offered this idea. So the other option is we both aggressively save, I continue my repayments (debt obviously won't go down significantly) but we could come up with a 20% deposit, save on LMI and be able to afford much higher repayments on the loan and be able to repay it in half the amount of time. I would continue to pay off my debt over the next few years as I planned.

I'm not really looking for advice such as cutting back our expenses (we already are with ending our rental lease, we have cheap phone plans, don't eat out, don't smoke, don't go out spending money for entertainment ect. I'm also aware Sydney prices are insane and we are looking at moving out as far as I think is reasonable for commuting to our jobs. We also aren't after a unit/ townhouse/villa, as I feel that these are a waste of money in the current Sydney market and strata fees are huge. We are currently looking at duplexes, which saves a bit of money but incurs no strata fees.

I'd love some feedback as to how we should tackle the savings vs. debt which = either debt free and lower deposit and higher repayments, or higher deposit and lower repayments on the loan. We are first time home buyers, who tend to get completely out priced in the Sydney market, so in a way having a higher deposit and lower repayments makes more sense to me. Our interest rates are stupidly low at the moment but house prices are insanely high.