August newsletter
Welcome to the August newsletter -Mortgage, Vehicle & Property Loan Solutions.
Please read and enjoy, where we look at :
1. First home buyers - 2 things you need to know about,
2. You are approved for Car finance for work/business??,
3. Lending myths -“The Banks are not approving loans.“
1. First home buyers – the two latest and greatest things. Well it’s not the First home owners grant, nor the transfer/ stamp duty concessions, nor the Parental Guarantee. It is :
1. What’s the First Home Super Saver Scheme (FHSSS)?
2. Whats the First Home Loan Deposit Scheme ( FHLDS)?
FHSSS is
· From 1 July 2017, you can make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into your super fund to save for your first home.
· From 1 July 2018, you can then apply to release your voluntary contributions, along with associated earnings, to help you purchase your first home. You must meet the eligibility requirements to apply for the release of these amounts.
· You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $30,000 contributions across all years. You will also receive an amount of earnings that relate to those contributions.
· Not just First Home Buyers - You may still be eligible even if you have previously owned property in Australia, if we determine that you have suffered a financial hardship that resulted in a loss of ownership of all property interests.
FHLDS is
· If you've saved 5% of the purchase price of your property the government will guarantee the remaining 15% of the deposit.
· You will still need to borrow 95%, but you can avoid the big cost of LMI.
· Eligible first home buyers can't be earning more than $125,000 a year ($200,000 for couples).
· Access to the scheme is limited to 10,000 borrowers.
· The value of eligible homes under the scheme will vary by region.
· The scheme starts on 1 January 2020.
· More details are yet to be announced ( so not too many questions yet)
2. You are approved for car finance?
The application process is really simple for applicants purchasing a vehicle predominately for business/work purposes, who:
· Own property – ( e.g. name appears on rates notice) not just residential
· Self employed ABN holder - best for 2yrs+
· Or PAYG applicant that the employer pays you a car allowance
· Or PAYG – with an accountants letter
· Buying from a dealer
· Car purchase under $100,000.
· ( some extra hurdles for private sales)
Then a number of banks may already pre-approve you for finance. Because its predominately for business purposes, the process is quicker and easier. We can approve you before you go to the dealer. Most loans settle in 3 days.
Rates and fees
· This is really competitive part of the lending market
· Rates for a new car from under 6% (comparison 6%)
· Better than dealer finance.
3. Lending Myths
“The Banks are not approving loans “ - The banks are in the business of lending. They are approving loans- some in record numbers. But they are really “getting to know the customer”- by asking for many more requirements.
What the banks are asking:
· 3 months transaction history for your main accounts – including credit cards
· Spending patterns or the B word – budget budget budget.
· Any little red flag in the application the banks sense – they want a full explanation.
What’s the issue ?
· The lender cannot put you into hardship, based on your individual/family spending habits. So slightly overdrawn accounts in the last 3 months (or earlier) can be detrimental.
· Banks are held accountable for people going to hardship, due to unsuitable debts. And this accountability is then being passed thru to the Broker/lending manager.
· The open credit reporting system – that shows your open loans, credit cards etc – and importantly the conduct of those borrowings. In the past, the credit report only showed the enquiry.
What are “red flags” in an application?
· Undisclosed debts/liabilities – (hate hate hate this one)
· Overdrawn accounts
· Large one off deposits
· Multiple loan/card/afterpay style enquires in the last 12-24 months
· Large incomes with low assets/savings
What’s the latest strategy.?
· Start planning and get some advice. Be more attentive to the conduct of your accounts and loans.
· Sometimes your existing bank knows too much about you – so consider splitting your banking.
· Show your accounts do have some form of budgeting – like a esaver holiday account, or making regular additional payments above the minimum.
· Have your own budget spreadsheet
· Consider lenders that don’t ask for statements – when there are some small overdrawn blemishes.
What about Low doc loans-
· Low doc loans are being approved
· Lending up to 60% LVR, or with fees – up to 90% LVR
The Royal Commission (RC) was it to Blame ?
· The quick answer is no. Many similar policies were already in the system. But the RC has increased the focus on this issue.
That is the end of another newsletter
If you have any questions about :
· what you have seen in this newsletter,
· or like to review your individual circumstances -please feel free to message me.
· or know someone who could use this information
we are here to help.
Mortgage, Vehicle & Property Loan Solutions. MVP Loan Solutions with the strength of the large mortgage broker aggregator - Financial & Systems Technology (FAST).
David Youels is a credit representative 409114 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).
David Youels
Lending Specialist
M: (+61) 0411 474913
Mortgage, Vehicle & Property Loan Solutions.