Brendan Barker

The big questions we’re receiving from first home buyers

17 Apr 2020 | First Home Buyers

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.

4 ways we can make your life easier right now

10 Apr 2020 | Family & Friends, Home Loans

You don’t need us to tell you how much the world has changed – there’s been no shortage of news bulletins updating you on that. So rather than telling you about more changes, today we’re going to explain how we can help.

While we can’t babysit your child so they stop shouting out and interrupting that important call you’re trying to make in your new home office, we might be able to reduce the number of important calls you need to make instead.

Here are four ways we can take a load off your shoulders right now.

1. We can help you stay inside (and sane)

As you’re probably aware, many bank branches around the country have recently closed temporarily.

And the ones that are open? Well, it’s not really a great time to visit them in-person about your mortgage or business loan.

Bank call centres aren’t much help either – they’re inundated. A whopping three-hours on hold is pretty much the standard wait time at the moment (that’s enough elevator music to drive anyone crazy!).

Now – we’re not huge fans of on-hold music either – but we’re more than happy to jump on the phone to your lender to help sort out any matters relating to your loan at this time.

2. Need to refinance or consolidate your loans?

When was the last time you did a home loan review?

If it was more than a year ago, now’s a good time because the finance and lending landscape has undergone several big changes over the past 12 months – including five RBA cash rate cuts.

So if you’re having trouble meeting your monthly repayments reach out to us and we can discuss some of your refinancing options.

And don’t forget to consider consolidating your debts – including your credit card, car loans or personal loans – so you have fewer debts to keep track of each month.

3. Need to pause your loan repayments due to hardship?

If COVID-19 has impacted your income to the point where you may need to pause your loan repayments, then we can help break down your lender’s deferral policy and support package policy for you.

Six-month loan repayment deferrals are available for both business loans and mortgages (but it may depend on your lender’s hardship policy for the latter).

We can also talk you through some of the other options that might be available to you to reduce your home loan repayments each month.

4. Want a pretend work colleague for a few minutes?

This one is a little left-of-field, but no less important in the current climate.

For many people, this is their first time working from home and we brokers know better than most that making that transition can be a tough gig.

So, if isolation is getting you down and you just want to chat to someone friendly for a few minutes, feel free to pick up the phone and give us a call.

Not only can we share some tips with you when it comes to nailing work/life balance in a home setting, we promise not to put you on hold for three hours beforehand.

And hey, it’s all good with us if the kids are running amuck in the background!

5 reasons it’s a good time to refinance

3 Apr 2020 | Refinancing

Found yourself with a little extra time on your hands due to social distancing measures? Slightly worried about meeting your home loan repayments? While the world has changed significantly over the past few months, it’s possible to use some changes to your advantage.

Before we go any further though, we want to say we understand there’s no shortage of Aussie families doing it tough right now. And we want to reassure you that we’re here to help you any way we possibly can – including helping you apply for support packages with your lender.

So where does refinancing fit in?

Well, the many social and financial changes that have been thrust upon us recently have combined to make it a good time to consider refinancing your home loan.

Here are five reasons why you may want to consider doing so.

1. Payment relief

When was the last time you refinanced your home loan?

If your answer was ‘one year ago’ (or longer), the finance and lending landscape has changed dramatically since then and it might be time to catch up.

There have been five RBA cash rate cuts since then since June 2019.

And while we’re on the RBA, a recent study of theirs found that borrowers who refinance with another lender, or negotiate a better deal with their existing lender, do in fact achieve interest savings.

So if you or your partner have recently had your work hours cut back and you’re starting to worry about how you’ll meet your monthly mortgage repayments, refinancing could be a more suitable option than applying for a hardship variation on your loan.

2. Consolidate your debts

Refinancing can also help you consolidate your other debts – including your credit card, car loans or personal loans – by combining them into a refinanced mortgage.

Not only will this give you one simple repayment to make each month (reducing the risk of forgetting payments and being slugged with a late fee), but all your debts will be charged at your home loan interest rate – which is usually much lower than credit card rates, for example.

3. Low interest rates: time to lock one in?

Fixed rates have recently experienced a big drop.

In fact, Domain’s David Hyman has described the current batch of fixed interest rate loans as “staggeringly cheap”.

“Only a couple of months ago the cheapest headline rate started with a three. If you look back to this time last year rates were in the high threes,” Hyman explains.

“For someone with a half a million dollar mortgage, that is well in excess of $10,000 a year in savings. It’s never been a better time to refinance quite frankly.”

And with the official RBA cash rate now at a record low 0.25%, there isn’t a great deal of room for it to go much lower.

4. Time on your hands

One of the more common reasons home owners give for not refinancing is that they simply don’t have the time do so.

But, without pointing out the obvious, I think it’s fair to say that we have far fewer social commitments taking up our time at present.

So, if you’ve compiled a list of things to do to keep busy at home, consider adding refinancing to the list.

Once you get the ball rolling on it and get in touch with us you’ll be surprised how little you actually have to do – after all, that’s our job, right?

5. We’re available to help you, whenever you need us

Finally, rest assured that we’re available and here to help you any way we can.

During trying times like these we know that we need to support each other now, more than ever.

So if you’d like us to help you explore your refinancing, hardship variation, or support package options then please get in touch – we’re ready to jump into action and make it happen for you.

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

24 Mar 2020 | Home Loans, Investor Loans

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.

RBA cuts cash rate to record low 0.25% amid COVID-19 outbreak

20 Mar 2020 | News

The Reserve Bank of Australia (RBA) has cut the cash rate to a record low of 0.25% following an emergency meeting due to the impact the coronavirus is having on the economy.

RBA Governor Philip Lowe said in a statement the move was due to the virus causing “major disruptions to economic activity across the world”.

“This is likely to remain the case for some time yet as efforts continue to contain the virus,” said Governor Lowe.

Governor Lowe added the cash rate cut would help support jobs, incomes and businesses so that when the health crisis recedes, the country will be well placed to recover.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band,” said Governor Lowe.

Hasn’t the RBA already cut the cash rate this month?

That’s right. And ordinarily, the RBA board only meets on the first Tuesday of every month. But as we’re all well aware, these aren’t ordinary times so an emergency RBA Board meeting was called.

The RBA last held its regular meeting on March 3 and cut rates to 0.5% because it believed the coronavirus outbreak was going to hit the economy hard.

However, over the past fortnight, global financial markets have been in freefall as countries all around world reel from the economic fallout of the COVID-19 pandemic.

Want to know what this rate cut means for your home loan?

It’s worth noting that lenders don’t automatically reduce your monthly repayments when they drop interest rates.

With this being the second RBA cash rate cut this month – and the fifth since June 2019 – if you need some extra financial breathing space each month due to the coronavirus outbreak then please get in touch.

We’re ready to work through your options with you, whether that be asking your lender to drop your monthly repayments, discussing budgeting tools, refinancing, or seeking hardship arrangements.

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