The big questions we’re receiving from first home buyers

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It’s fair to say it’s an unusual time to be a first home buyer. But there are still opportunities out there for those whose jobs haven’t been affected by COVID-19. 

Here are five key talking points we’ve been regularly discussing with first home buyers in the current market.

1. Is the First Home Loan Deposit Scheme (FHLDS) still available?

Many first home buyers have been saving their home loan deposit over the last 5-10 years, trying to reach that magic 20% figure where you don’t have to pay Lenders Mortgage Insurance (LMI).

But a new path recently opened up for first home buyers: the FHLDS.

Places in the scheme, which started on January 1, are still available and can allow eligible first home buyers to purchase a property with a deposit of just 5% without having to pay LMI.

If you’d like to take advantage of the scheme, give us a call and we can help you through the process.

2. Has it become tougher for first home buyers to get a loan in recent months?

This will depend on your individual situation and how much coronavirus has impacted your household’s bottom line.

Interestingly, though, the latest Australian Bureau of Statistics data doesn’t suggest it was any tougher for first home buyers to get a loan in February than the previous few months.

Indeed, over the month, home loans for owner-occupier first-home buyers increased by 0.4%.

That said, COVID-19 didn’t really start impacting the Australian economy until March, so we’ll keep monitoring the data for you in coming months.

3. I heard QBE is no longer insuring borrowers from distressed sectors?

One of Australia’s largest insurance groups, QBE, has temporarily suspended offering LMI to specific groups of new mortgage borrowers, such as those working in hospitality, tourism, gyms and beauty salons.

The good news is that Australia’s other major LMI provider, Genworth, told the AFR it has no plans to change its existing position on LMI, stating that it trusted lenders to “apply responsible lending standards and assess applications on their merits”.

Also, if you’re taking out your first home loan through the FHLDS, remember that the whole point of the scheme is that you don’t have to pay LMI – so that’s another reason to consider applying.

4. Are lenders requiring evidence that my income will be stable?

In the current COVID-19 climate, it’s safe to say that lenders will be scrutinising your income and will require sound evidence that your income will be stable.

This shouldn’t create too big a headache for those employed in essential services, such as a Coles permanent employee, a pharmacist, or an IT professional in a government department, for example.

But others in less coronavirus-proof industries may find it more difficult to prove their income is stable.

For example, some lenders are no longer accepting bonus income for borrowers outside essential services, unless their employer can write a letter to say that the bonus will continue to be paid out at the current level.

Your best bet is to give us a call – we can run through your situation and help you identify any areas that may be an issue in advance.

5. I heard valuations are coming in lower than the contract price?

There’s no shortage of recent stories out there of valuations coming in lower than the contract price, and the gap is proving difficult for some off-the-plan buyers to make up.

So if you’re a first home buyer and you’re worried about a lower valuation then please get in touch. We can run through the options that may be available to you to make up the shortfall, including going through the FHLDS (mentioned above).

Give us a call

Buying your first home can be a bit overwhelming at the best of times, let alone during a period of uncertainty and rapid change. Rest assured though that we’re on top of it.

So if you’d like us to help you explore your options and secure a competitive home loan then please get in touch – we’re ready to jump into action and make it happen for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

What is the Coronavirus SME Loan Guarantee Scheme?

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SME businesses in need of working capital due to the coronavirus outbreak can now access unsecured loans “more cheaply and more freely” than ordinary business loans.

The initiative is part of the government’s $40 billion Coronavirus SME Loan Guarantee Scheme, which kicked off just before the Easter weekend.

Because the government will guarantee 50% of the new loans, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.

The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Furthermore, no payments are required from the business on these loans for the first six months (however interest will capitalise during the repayment holiday).

Eligibility requirements

The government will provide eligible lenders with a guarantee for loans with the following terms:

– eligible SMEs, including sole traders, must have a turnover of less than $50 million

– maximum loans of $250,000 per borrower

– loans will be up to three years, with an initial six month repayment holiday

– unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

The decision on whether to extend credit, and management of the loan, will remain with the lender.

Want to apply?

Participating lenders are already accepting applications from SMEs. So if you’re looking to bridge a gap in your business’s cash flow, please give us a call.

We’re more than happy to discuss your eligibility and more features of the scheme.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Further protections for businesses: loan deferral scheme extended

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Here’s some promising news for big and small businesses alike: six-month loan deferrals are now available to larger businesses on the condition that they don’t terminate leases or evict tenants for falling behind on their rent due to COVID-19.

Two weeks back, the Australian Banking Association (ABA) announced that if your small business was being affected by the coronavirus, your loan repayments would be deferred for six months.

They’ve since extended this support to businesses with loans of up to $10 million (up from the $3 million), which is expected to directly benefit a further 30,000 businesses across the country.

Why the loan deferral extension helps businesses big and small

Now, on the face of it, it may seem like this loan deferral extension is good news for the bigger end of town.

But it comes attached with conditions that will help out small business owners across the country too, as it covers 90% of commercial property owners who have loans with an Australian bank.

“The type of businesses this applies to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID19 in order to access support,” says ABA CEO Anna Bligh.

The conditions

Basically, the conditions have been designed to encourage landlords to support their tenants.

“Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them,” explains Bligh.

The new measures will apply in all sectors of the economy, on an opt-in basis, under the conditions that:

– commercial property landlords must provide an undertaking to the bank that for the period of the interest capitalisation, they will not terminate leases or evict current tenants for rent arrears as a result of COVID19

– the customer has advised that its business is affected by COVID-19

– the customer was current in terms of existing facilities 90 days prior to applying

– interest is capitalised, meaning either the term of the loan is extended or payments are increased after the deferral period.

Businesses with total loans of more than $10 million may also be eligible for relief, but this will be considered on a case by case basis.

Get in touch

It’s important to note that this isn’t the only assistance package that’s been made available to businesses since the coronavirus outbreak started impacting the Australian economy.

For example, the federal government’s instant asset write-off scheme’s threshold has increased from $30,000 to $150,000, and each lender has their own specific support packages available.

So if you’re a business owner – big or small – who would like to explore the options available to you then please get in touch. We’re here to help you 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 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.

Need to pause your mortgage repayments? Here are the banks’ deferral policies

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This is one article we hope you never have to read. But if COVID-19 has impacted your income to the point where you may need to pause your mortgage repayments, then we’ve broken down the banks’ deferral policies for you.

Late last week the Australian Banking Association (ABA) announced that small businesses affected by the coronavirus would have their loan repayments deferred for six months.

But when it came to home loan customers, there was no similar, wide-sweeping announcement from the ABA.

Rest assured though that all the big four banks are allowing customers who have been impacted by the coronavirus to hit pause on their mortgages for up to six months.

Many of the smaller lenders are also allowing deferral relief measures too, including Macquarie and Bank of Queensland, for example.

Below we’ve outlined the deferral policies each of the major banks are offering customers. It’s important to note, however, that these aren’t the only hardship options available to you, so if you’d like to find out more, please get in touch.

Commonwealth Bank

All CBA home loan customers are now eligible to defer loan repayments by up to six months. A digital registration process is available for any home loan customer wishing to defer their repayments.

Here’s a full statement on the support CBA is providing for personal customers.

Westpac

“Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review,” the bank said in a statement.

Here’s the statement and support package details in full.

NAB

Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.

For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month, NAB says.

Check out their statement for more details on their support package.

ANZ

If you’re experiencing financial difficulty due to COVID-19, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised (see below).

If you pause your repayments, ANZ will check in with you after three months.

ANZ have also released a statement detailing their full customer support package.

Other lenders

For all other lenders please check their website for more details, as APRA has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.

If you’re having trouble finding the details, google: [your lender’s name] + home loan deferral coronavirus.

Failing that, check out their website’s ‘Newsroom’ or ‘Media’ page for recent announcements.

An important final note

It’s important to note the above policies only state that they’ll defer your repayments – it’s likely they won’t stop interest from accruing on your home loan.

For example, as ANZ notes in their statement, home loans with repayments paused will have their “interest capitalised”.

Basically, that means your home loan amount will continue to grow while repayments are on pause, as any unpaid interest will be added to your outstanding loan balance.

With that in mind it’s worth noting there are other options you can explore to reduce your home loan repayments each month besides hitting the pause button, so please feel free to get in touch with us if you’d like to explore those avenues.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 repayments deferred six months for small businesses affected by COVID-19

If your small business is being affected by the coronavirus your loan repayments will be deferred for six months, says the Australian Banking Association (ABA).

ABA CEO Anna Bligh today announced a small business relief package from Australia’s banks.

“Small businesses can rest assured that if they need help, they will get it,” Ms Bligh said.

The assistance package will apply to more than $100 billion worth of existing small business loans and, depending on customer take-up, could put as much as $8 billion back into the pockets of small businesses.

“This is a multi-billion dollar lifeline for small businesses when they need it most, to help keep the doors open and keep people in jobs,” Ms Bligh said.

Ms Bligh added that banks were putting in place a fast track approval process.

“Banks are already reaching out to their customers to offer assistance and packages will start rolling out in full on Monday [23 March],” she said.

Government to invest up to $15 billion in support of SME lending

The ABA loan deferral announcement came one day after the federal government announced a $15 billion commitment to enabling smaller lenders to continue supporting Australian consumers and small businesses.

The government said it hoped that the investment would enable customers of smaller lenders to continue to access affordable credit as the world deals with the significant challenges presented by the spread of coronavirus.

The government announcement came shortly after the RBA cut the cash rate to a record low of 0.25% following an emergency meeting due to coronavirus.

But wait, there’s more.

Earlier in the week the federal government announced a range of measures to stimulate SME spending via tax incentives and other initiatives.

One measure included changes to instant asset write-off provisions – the threshold was increased from $30,000 to $150,000 (ex GST) and write-off provisions were opened up to businesses with an annual turnover of up to $500 million (the previous cut-off was $50 million) until June 30 2020.

Get in touch

It’s fair to say there has been a lot of news to get your head around this week.

And while it can seem overwhelming during these uncertain times, rest assured that we’re keeping on top of the announcements that matter to you.

So if you’d like to explore any of the changes outlined above – including the six-month loan repayment deferral – please get in touch. We’re here to help you 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 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.