The 7% solution

The house we are living in isn’t very well organized. When the removalists (or are they called replacers when they are bringing the stuff into your house?) were unpacking our stuff last August, they were a lot faster at unboxing/unwrapping than we were at putting things into the cupboards. To keep the countertops clear for them, we just stuffed things in whatever cabinet or drawer was convenient at the time. But we haven’t since rearranged any of it, so the mugs we use daily are hard to reach, our kitchen drawers are a mess, getting a glass requires a long stretch… But we haven’t bothered to put any of it away in better places because that would be admitting that we live in this house, and we don’t want to be here. It is a rental, a temporary place to stay.

We've never actually sat in this room in the rental house. The only reason it has furniture is that it is at the front of the house, so visitors see it and we don't want it to look empty.

In January, we signed a second six-month lease on this house, with a plan that by the time it ends in middle of July, we would buy our own house. A place where we will organize the cupboards, where we will actually put together the home gym that is in pieces in a back room right now. A place where we will actually use all the rooms, where we decide what goes on the walls (not just what fits on existing nails, since new holes are verboten), and where we decide the colours. A place where rather than barbecuing most nights like we are camping, we will cook proper meals [Lisa edit: yes, Dan actually said this one day – the reason he never wants to cook things like osso buco and risotto, things we made a lot in Edmonton, are because those are things you make at home and this house isn’t home]. A place where we actually live.

So we have started the process of buying a house; a couple of weeks ago, we went to talk to someone at our bank about a mortgage, and this weekend we went to a few open houses. It isn’t going to be a quick purchase, as there are some things that need to happen first, but we’re getting started.

If we owned this house, we would definitely put something on this wall.

First, we need to get some of our money from Canada. We still do some banking there, and have our retirement savings there. We might have to tap into our accounts there for our down payment. If we hadn’t had so many expenses when we first arrived, such as paying cash for our car and mobile phones, we wouldn’t have to worry. But as it is, we will have to write ourselves a cheque on our Canadian account and deposit it into our Australian account. It might take a month or so to clear. [Lisa edit: yes, we know that these are first-world problems]. But that is fine, because we can’t jump right in anyway; we are still waiting for our permanent residency application to go through. We don’t need PR status to buy a house, but 1) it makes it easier to get a mortgage and 2) there is a $7000 first-time buyer rebate (for PRs and citizens) that we can get on the ‘stamp duty’ that is applied to the purchase. So as soon as we get our status, we can save $7000!

The bank would lend us enough for this house here in Wagga, but we don't really feel like spending $1.2 million.

Because of our incomes, we won’t have a hard time getting a mortgage. The person we met at the bank did some quick number crunching and said they would give us well over $1 million. Dan said we probably didn’t need that much because we are in Wagga…she didn’t laugh. In fact, there are a few houses in the city that are in that range, and a lot in the $7-8 hundred thousand range (but we don’t want to spend more than $500 000).

Banking here is a bit odd. So is looking for a house, but we will cover that next time….for now, a bit about money.

We have 2 bank accounts: a savings account and another savings account. No chequing account, even though the first one we opened was supposed to be what we would have, in Canada, called a chequing account (where you do most of your transactions). But when we first tried to use an ATM machine, it didn’t work, and the person at our bank – they are very friendly and helpful – explained that we have a savings account. So we have no idea what a chequing account would be here. Maybe they don’t have cheques; everyone seems to transfer money in various ways through online/phone banking. When we last rented a place in Canada we had to provide a monthly cheque; here, it’s all direct withdrawal.

Our other account is called a ‘Goal Saver’ account, and it gets a really good interest rate. So good, in fact, that it is better than our GICs in Canada, and probably almost as good as our mutual funds. We are getting 5.5% interest on a bank account, as long as we deposit at least $200 per month! Wow! Our basic Canadian account might have made about 0.05%, our GICs about 1.5%. Hmm… don’t you wish that you could send us some cash to “invest” for you (wink wink, nudge nudge… Dan has his eye on a few high-end kitchen appliances, after all).

We could get this house for one sixth of the price of the one above. We think we will look somewhere in the middle of the range instead.

However, it is a case of those with money being able to make money, while those without money have to pay. Our mortgage rate will be almost 7%. That is double what we were paying in Canada. But there is another odd thing about mortgages – you can use them as savings accounts.  Say you borrow $500 000 and the required minimum payment is $2000 per month. If you pay $2500 each month, that extra $500 is yours to use if  you need it. It comes off the principal, therefore cutting the interest  you are paying, but if you need it for something you can get it back, and your principal just goes back to what it should have been. Weird. Convenient, but weird.

So the next step is to find a time to get to the bank.  Like in the olden days in Canada, banks here are open 9 to 4, Monday to Friday. This means that if you work (which you need to do to make money, which is why you need the bank in the first place!) you can’t get there and deposit a cheque from us to us (or you to us, if you’re feeling generous). We are quite sure, based on past experience, that there will be multiple steps and forms (and people) involved, as well as the requisite $10 fee for processing a foreign currency cheque. We will have to figure out how long it will take to clear and what will they even think of an international personal cheque for several thousand dollars, written by ourselves to ourselves. Sadly, because of anti-terrorism laws, it’s very difficult to move even small amounts of money across borders. For example, did you know that you can only send a wire transfer from your bank, in person, so that they can verify your identity, physically? Even if you’ve sent money previously through that branch and are using the same account numbers, etc., they must verify your identity through a multi-step process every time (same rules apply in Australia, Canada and elsewhere)! This means that if you are in another country and need to access funds, the process is near impossible (aside from pulling your daily limit on your debit card, with multiple fees, and standing at ATMs for quite some time). [Dan edit: of course, Lisa does all of this; my banking skills don’t extend past ATMs and some basic online banking.]

Once this is sorted, we can apply for pre-approval of the mortgage and start seriously house-hunting rather than just looking online, in the weekly real estate section, and a bit of lazy wandering through open houses, looking in people’s pantries and closets, and wondering why they didn’t at least cut the grass before the open house.

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About waggadventure

Canadians newly relocated to Australia.
This entry was posted in banking, cultural differences, real estate, wagga. Bookmark the permalink.

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