Newsletter May2020

1. Let’s rally all First Home Buyers to rescue the property market - these fantastic incentives are why! 2. CoVid19 income - can it be used?

Tell every First Home Buyer you know to save 5% deposit – start now!!

Firstly, this FHLDS offer is unbelievably good.

Qualify for FHLDS & you won't pay the big cost of Lenders Mortgage Insurance (LMI). A really big head start to owning a home!!
See the calculations below - FHBuyer Purchase for 475,000 will need about $27,500 + ongoing loan repayment less than $400/week.
FHBuyers make up about 12% of the purchase market.

First Home Loan Deposit Scheme (FHLDS) - save approx. $16,000 LMI costs

To be eligible for FHLDS, you must:

save 5% of the purchase price and be an eligible First Home Buyer

be single, married or defacto (not siblings/friends/relatives) Aussie Citizens only
borrow above 80% and up to 95% of the home price, and you will avoid the cost of LMI.
owner-occupied purchase for $475,000 or less. (Brisbane and SEQ coasts)
not be earning income/s more than $125,000 a year ($200,000 for couples)
be any approved property - does not need to be a new home
continue to live in that property for so long as your home loan has a guarantee under the Scheme

Allocations limited to 10,000 borrowers per financial year.

Some major lenders have used their FHLDS allocation So the major banks say you have to go on a waiting list!! -

but the smaller lenders have many FHLDS allocations available - and are very keen to approve loans at similar interest rates!!

First Home Loan Deposit Scheme - are available - estimates as at May

1200 – Places available to second tier lenders

400 – Places available to Bank AW
Note: most Major banks have used all their allocations and put you on waiting lists.

First Home Owners Grant Qld (FHOG) - you are given $15,000

To be eligible for FHOG, you must:

be an Australian citizen or permanent resident

not have previously owned property in Australia that you have lived in (nor spouse)
buy a brand-new unit/home (or build) for less than $750,000
move into the house within 1 year and live there continuously for 6 months
Note: all purchasers & borrowers & spouses must not have owned a property in Australia

First Home Super Saver Scheme (FHSSS) - not as popular

To be eligible for FHSSS, you must:

make voluntary before/after-tax contributions into your superannuation

apply to release your voluntary contributions, to purchase your first home
put a maximum $15,000 per year of your voluntary savings to super under the FHSS scheme,
a maximum of $30,000 contributions across all years.
Not just First Home Buyers - consideration for buyers with previous financial hardship

FHBuyer Transfer Duty Concession - save up to $15,925 on transfer duty

To be eligible for a first home buyer transfer duty concession, you must:

have never claimed the first home vacant land concession
have never held an interest in another residence anywhere in Australia or overseas
move into it and live there on a daily basis within 1 year of settlement
purchase price below $500,000 for full concession (partial - up to $549,999)

but wait - there is more….

"The Bank of Mum and Dad” or Guarantors - avoid LMI costs

Here are four ways that family can help to purchase property:
a) Guarantor on a loan - placing home/property/cash as additional security, lend up to the full amount to purchase avoiding LMI costs
b) Gift some money for deposit best to gift 20% or at least 10% + purchase costs. For FHBuyers with rental history
c) Buy the house with the relative as co-purchaser but the FHBuyer would lose FHOG and full transfer duty concessions.
d) Parents funds fully protected - Parents with cash/equity can make an investment into a managed deposit, then establish an equivalent loan to the child. A third Party provides the paperwork agreements and structure to protect the parents. Best use - when you don't trust your sibling/ partner, but still want to help. It's great protection and control for the parent.

So, To Summarise

Purchase a new home as your first home for less than $475,000 in the Brisbane SEQ area; to live in;
Save 5% - you may be eligible for all 4 FHBuyer options.
And if the property is not new - then you may be eligible for 3 options - (ineligible for FHOG.) But still eligible for FHLDS

(all these options and schemes require further discussion and T&Cs)

Lastly

If you can't save the 5% deposit - then there are still options:

Higher interest rate option for both first home buyers and owner occupiers.

• 3 % genuine saving or 5% deposit required + Government costs - but full 5% does not need to be saved. (non-genuine savings okay.) Money can come from any source - you don't need to hold it for 3 months. But you need stable income 12months+, and enough funds to complete settlement.

• 95% LVR plus capped LMI (up to 98% LVR)

• Gift, FHOG or 6 months rental statements as support of a 5% deposit

• Purchase + owner occupied only + P&I repayments (not construction)

• Genuine Savings requirement from the banks, is saving your 5% deposit over a 3 month period. Or perhaps - be given/gifted the 5% deposit -hold the money in an account for 3 months + also add $$. This is a quality the banks require lenders to display. And the rewards are lower interest rates, and FHBuyers incentives.

But remember – if you have a good history renting thru a Licensed agent for 3-6months, you may be eligible immediately for genuine savings and thereby lower rates. (but not all the FHBuyers incentives)

So, Let’s run thru an actual FHBuyer scenario- QLD:

Purchase for 475,000 you will need about $27,500

+ ongoing loan repayment of less than $400/week.
Genuine save 5%= $23,750

Plus, approximate costs:

FHBuyer total Qld Government costs =$1464

conveyancing fees $1500est + building and pest $600est
Total = 3564

With the FHLDS you don’t pay LMI cost of $16500 (approx.)

Total $$ FHB needs: 475,000purchase = 5% + costs = 23,750 +3564

Total $$ FHB needs: 300,000purchase = 5% + costs = 15,000 +2316

& even more offers from individual lenders

Bank S; waive for the life of loan, $395p.a annual package fee for FHBuyers -

Bank A; provide a conveyancing rebate/payment of $1000 to FHBuyers.
Bank N&S; offer 33% discount off LMI for FHBuyers
Lots of Banks offer FHBuyer only Special low interest rates.

2. Covid income -what is allowed?

Some lenders are now able to use the JobKeeper payment for the servicing of PAYG borrowers. (not jobseeker)

For those customers receiving the payment, we’ll request a payslip from the pre-covid19 changes (16 March) showing their normal income level and the last 2 payslips showing the current income level.

For some customers, there will be no change. If there was a change, pre and post the 16 March income levels, we’ll take the lesser of the two.

Self-employed borrowers – expect to produce more and more – to justify that your income has not suffered. Some banks are restricting lending to 80% LVR.

All borrowers are expected to answer these questions -

At this point in time are you aware of any changes to your broader situation that may impact on your earning capacity?

Have you been advised of any changes to your employment circumstances or income levels that will affect your ability to meet any existing debts or expenses?

Lots to understand. Google the Government sites for the detailed eligibility - or give me a call if you have any questions

Regards,
David Youels
M: (+61) 0411 474913

E: david@MVPLoanSolutions.com W: mvploansolutions.com

Mortgage, Vehicle & Property Loan Solutions David Youels is a credit representative 409114 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).