$1 lenders mortgage insurance for eligible first home buyers

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You’ve probably heard something along the lines of ‘you need a 20% deposit to buy a home’, right? Well, not necessarily. Today we’ll look at two options available to eligible first home buyers, including a $1 lenders mortgage insurance offer that’s just been launched.

Now, to be fair, that 20% deposit figure quoted by your uncle Barry wasn’t plucked out of thin air. Barry’s just a little behind the times (as a scroll through his Facebook feed would attest).

Let us explain.

In the past, first home buyers typically had to save a 20% deposit to avoid paying lenders mortgage insurance, otherwise known as LMI.

Now, this insurance isn’t to protect you. LMI is to protect the bank against any loss they may incur if you’re unable to repay your loan (because they see first home buyers with less than a 20% deposit as higher risk).

The problem is that LMI isn’t cheap. For example, if you wanted to purchase a $600,000 property, but only had a 15% deposit ($90,0000), you’d likely have to pay about $6000 in LMI.

But since the start of the year, two options to avoid paying thousands of dollars in LMI have emerged for eligible first home buyers: the first being the federal government’s First Home Loan Deposit Scheme (FHLDS), and more recently, St George’s $1 LMI offer.

Let’s start with St George’s $1 LMI announcement

Basically, LMI will be reduced to only $1 for eligible first home buyers with a Loan to Value Ratio (LVR) up to 85%.

In other words, it’s for first home buyers who have a deposit between 15% and 20%.

Here are a few other important eligibility details:

– The LMI purchase must be for your first home loan and for your first property (however for joint applications, only one applicant must be a first home buyer).
– You must be the owner-occupier of the property and make principal and interest repayments.
– The offer is available on loans up to $850,000 (with a 15% deposit, this equates to a $1 million property value, which is much higher than the FHLDS below).
– Only one property can be financed per application.
– There are no income caps.

The first home loan deposit scheme

The federal government’s scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for LMI – which can save you up to $10,000. ⁣⁣

⁣⁣But here’s the catch: only 10,000 spots are available this financial year.

⁣⁣That might sound like a lot but 3,000 spots went in the first 10 days last time.

There are a few other important eligibility details to consider here, too, including:

– Property price caps for different cities and regions across the country (ranging between $400,000 to $700,000 in capital cities).
– Income caps (singles $125,000, couples $200,000).
– For couples, both need to be eligible home buyers.

Get in touch

We understand that buying your first home can be daunting.

But the good news is that we help first home buyers apply for finance on a weekly basis, and we pride ourselves on being there for our clients to guide them through the process.

So if you’d like to find out more about one of the LMI offers above, then please get in touch – we’re more than happy to explain them to you in more detail.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Loan deferrals to be extended for customers who need extra breathing space

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Home and business owners struggling financially due to COVID-19 will be given another four months to resume paying back their loans.

Extended loan deferrals will be provided to those who genuinely need more than the current six-month timeframe, says the Australian Banking Association (ABA), however, extensions won’t be automatic.

While each bank’s deferral policy differs, it’s important to note that deferring repayments on your loan generally doesn’t stop interest from accruing.

As such, customers who are able to repay their loans will resume doing so, says the ABA, adding that it’s in their best interests to do so and allows banks to direct support to those who need it.

800,000 people have deferred their loan repayments so far during the COVID-19 crisis and the four-month extension aims to help the economy avoid the September ‘cliff’ that you’ve probably heard about.

How do you apply for a home loan deferral extension?

The good news is you won’t have to. If repayments on your home or business loan have already been deferred then your bank will contact you when the end of your six-month deferral period nears.

That’s because they’ll first want to discuss some possible options to restructure or vary your loan, including:

– extending the length of the loan
– switching to interest-only payments for a period of time
– consolidating debt
– a combination of these and other measures.

If you’re financially unable to enter into one of the above arrangements by the end of your six-month deferral period, you’ll be eligible to extend your deferral for up to four months.

Will your credit rating be affected?

Good news. If you recommence repayments on your existing loan or enter into a new repayment arrangement, your credit report will not be impacted, provided you meet the new repayment arrangements.

The same goes for if you’re granted an extended deferral period that’s approved by your bank: your credit report will not be impacted.

Want to find out more? Get in touch

If you’d like more information about the repayment deferral extension, or to discuss some possible options for restructuring or varying your loan before the bank puts you on the spot, then please don’t hesitate to get in touch.

We’re here to help you through these difficult times any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Want to buy your first home with a 5% deposit and save up to $10,000?⁣⁣

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On your marks, get set, go! The race is on for limited spots in the federal government’s First Home Loan Deposit Scheme, which kicked off again on July 1.⁣⁣
⁣⁣
The scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000. ⁣⁣
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But here’s the catch: only 10,000 spots are available this financial year.
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That might sound like a lot but 3,000 spots went in the first 10 days last time. ⁣⁣

What exactly is the First Home Loan Deposit Scheme (FHLDS)?

Usually, first home buyers with a deposit of less than 20% have to fork out for LMI when taking out a home loan.

But under the federal government’s FHLDS, eligible first home buyers with only a 5% deposit can purchase a property without having to pay for LMI.

Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.

But the good news is that it is available alongside other state and federal government first home buyer schemes that are currently running.

More details on eligibility and property price caps can be found on the scheme’s website www.nhfic.gov.au.

Let us run you through the details

If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.

While 10,000 spots might sound like a lot, the starter’s gun has already gone off and hundreds of first home buyers could apply for the scheme every day in the first two weeks alone.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Final touches on $25,000 HomeBuilder scheme announced

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The “crucial final touches” on the federal government’s $25,000 HomeBuilder scheme have been revealed. Will your build be eligible?

When the federal government announced its $25,000 HomeBuilder scheme in early June the immediate reaction from many was ‘you little beauty’, quickly followed by, ‘wait… will my project even be eligible?’

It’s a question that’s lingered for a few weeks, however we now have more clarity.

And the good news is that the Housing Industry Association (HIA) – the construction industry’s peak national body – has welcomed what it’s labelled the federal government’s “crucial final touches” on the scheme.

So what are these final touches? Let’s take a look.

More wiggle room for finance and building approvals

It looks as though homeowners now have a little more wiggle room when it comes to having their finance, building proposals and other legal requirements approved.

One of the biggest criticisms of the scheme when it was first announced was that homeowners needed to get everything approved and construction commenced within a fixed three-month timeframe.

Now, the scheme’s official FAQ on the Treasury website still states that construction must commence within three months of the contract date.

However, it now adds a provision for cases where approvals are unexpectedly delayed.

“States may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract. For example, delays in building approvals,” Treasury states.

Here’s what the HIA adds on the update: “Recognising that a fixed three-month timeframe to commence building work did not reflect how dependent home builders are on other players, like the banks, the councils and building certifiers, is extremely important.”

Off-the-plan apartments and townhouses

Off-the-plan apartments and townhouses that don’t exceed $750,000 are eligible for HomeBuilder.

But what was doing a lot of people’s heads in was the timing of it all: did it simply need to be an off-the-plan purchase? Could construction have already been underway?

Well, we now have some clarification.

To qualify for the scheme the first box to tick off is that you need to sign the contract to buy the off-the-plan dwelling on or after 4 June 2020, and on or before 31 December 2020.

The second box is that construction needs to commence on or after 4 June 2020, and no later than three months after the contract is signed.

If, however, you sign the contract to buy the dwelling after 4 June 2020, but construction commenced before 4 June 2020, then the home won’t qualify for HomeBuilder.

Now, as mentioned in the above section, keep in mind that states and territories may exercise discretion where the commencement of construction is delayed beyond three months and it’s outside your control.

However, you’ll definitely want to ensure you do your due diligence on the project’s estimated construction date to give yourself the best possible chance of receiving the $25,000 grant.

Payments expected to be aligned with first home owner grants

Last, but certainly not least, Treasury released more information on the timing of the $25,000 payments.

“It is expected that, where possible, states and territories will align the HomeBuilder application processes with existing processes for first home owner grants (or similar),” Treasury states.

Basically, this means the ball is now in the court of state and territory revenue offices, which will soon outline the final details of how applicants can apply as well as the timing of the payments.

And the good news is the HIA is optimistic.

“HIA has been working closely with state and territory revenue offices and we look forward to receiving these details soon, which will assist home buyers and builders to begin taking full advantage of the grant,” the HIA said.

Get in touch

As mentioned above, while the federal government has provided its final touches on the scheme, we’re still waiting for each state and territory to confirm their own final touches.

But if it looks like you’ve ticked the above boxes and you want to start looking at financing options for your HomeBuilder project, please get in touch.

As with most things in life, the more organised you are, the better!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Best Aussie suburbs to find a "renovator's dream"

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Most of us have at one time dreamed of discovering a hidden little gem and renovating it into the most enviable house on the street. With the $25,000 HomeBuilder grant, those dreams are closer to becoming a reality for many. But where to look?

Well, recent realestate.com.au data might have revealed the answer.

They’ve analysed all the listings in their database for keywords such as “renovate”, “renovation” and “STCA” (subject to council approval), and then ranked each suburb on the percentage of properties containing those keywords.

So with the federal government’s HomeBuilder scheme providing eligible homeowners a $25,000 grant to substantially renovate their homes, the below suburbs could be a good starting point for your search.

The top five “renovator’s dream” suburbs in each state

NSW: Lethbridge Park 2770 (70%), North St Marys 2760 (67%), Hebersham 2770 (64%), Oakhurst 2761 (62%), Kandos 2848 (59%).

VIC: Frankston North 3200 (70%), Mount Dandenong 3767 (50%), Canterbury 3126 (47%), Ivanhoe East 3079 (45%), Doveton 3177 (44%).

QLD: Sadliers Crossing 4305 (58%), Petrie Terrace 4000 (53%), Newtown 4305 (50%), Herston 4006 (50%), Grange 4051 (47%).

WA: Glen Forrest 6071 (50%), Northcliffe 6262 (47%), North Lake 6163 (42%), Greenmount 6056 (41%), Greenwood 6024 (40%).

SA: Angaston 5353 (50%), Happy Valley 5159 (50%), Hawthorndene 5051 (42%), Aberfoyle Park 5159 (41%), Panorama 5041 (40%).

TAS: Battery Point 7004 (50%), Triabunna 7190 (46%), Moonah 7009 (46%), West Moonah 7009 (38%), Dynnyrne 7005 (36%).

ACT: Wanniassa 2903 (46%), Farrer 2607 (42%),  Evatt 2617 (40%), Curtin 2605 (37%), Mawson 2607 (32%).

NT: Driver NT 0830 (39%), Woodroffe 0830 (38%), Fannie Bay 0820 (33%), Rapid Creek 0810 (32%), Moulden 0830 (31%).

Keen to turn your reno dream into a reality?

Day-dreaming about renovating is one thing; financing it and actually making it happen is another. Fortunately, that’s where we can help out.

So if you’d like help obtaining finance to pay for that reno project you’ve got your eye on, get in touch with us today – we’re here to help make your reno dream a reality.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.