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 with a mortgage broker. 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.

Ready to purchase a new home? Before you go shopping for your dream home, perhaps you should consider working with a professional mortgage broker first. If you are new to the process of home purchasing, you might not even be familiar with the role of a mortgage broker. More importantly, how can you find the best mortgage broker in Sydney?

In this article, we will go over the basics of working with a mortgage broker. But aside from that, we will also cover the crucial steps that all home buyers should take to find the best mortgage broker. If you are curious to find out more, then read on.

Why do you need a mortgage broker?

Mortgage brokers provide advice and direction to home buyers. Whether it is your first time to buy a home or you are purchasing another property as an investment, you can always use the expertise of a mortgage broker in Sydney to point you to the right mortgage deals. More than that, they can also do the groundwork, so you don’t have to.

Cut yourself some slack.

Instead of having to pour hours on end looking for the best deals, they instead tap into their lending partners for a deal that will best suit your needs. Moreover, mortgage brokers specialise in handling all the paperwork needed to apply for the mortgage deal that you want. In many cases, mortgage brokers will be able to cut down your stress levels significantly and save you some time too.

Maximise your finances.

Mortgage brokers are especially good at assessing the mortgage market. They will sit down with you to accurately estimate how much you can afford and match your finances to a deal that you can comfortably sign up for. You can spend so much more on the wrong deal when you work without their valuable industry know-how.

Choose from the best options.

The best brokers will be wise enough to steer you away from deals that you are not likely to get. You have to be especially careful on that part since rejected applications can negatively affect future applications. They can determine which loans will be favourable for you and advise you on how to increase your chances.

Purchase with more security.

If further down the line you realise that the mortgage you signed up for no longer works for you, then you can always bring up that complaint and have it straightened out with your broker. Going solo might not allow for such security.

So, now that you know the benefits of working with a mortgage broker, how can you find the best one? Here are some steps you can follow.

Step 1: Identify your needs.

You won’t find what you are looking for if you don’t even know what you need in the first place. Before you set out to hire a mortgage broker, you need to first identify what you want from a mortgage broker.

How much can you shell out for a down payment? What kind of repayment scheme do you prefer? Would you prefer someone who is an expert at finding the best deals in the suburbs? Will they be able to work with your current financial situation? These are just some things you should consider.

Step 2: Make sure they are accredited brokers.

Before you even consider working with a potential broker, make sure they are licensed to provide loan advice to property buyers like you. Some things you should look out for include the following:

• National Consumer Protection Act accreditation
• Certificate IV and Diploma in Financial Services
• Mortgage & Finance Association of Australia (MFAA) membership or Finance Brokers Association of Australia (FBAA) membership
• Australian Financial Complaints Authority (AFCA) membership

You may use online hubs like the Australian Securities and Investment Commission Connect to search for licensed mortgage brokers in Sydney and anywhere else in the country.

Step 3: Consider the many types of mortgage brokers.

There are many types of brokers. For example, some brokers who provide their services strictly online, while others provide mixed online and offline services. Some whole-of-market brokers can assess every mortgage available in the market regardless of affiliation.

Whole-of-market brokers might be suitable for you if you really wish to maximise your property investments. Some mortgage advisers and brokers recommend mortgages offered by their limited number of lending partners, while banks might direct you to their own product range.

Step 4: Know their service features and fees.

Some other factors that you should definitely not sidestep are their service fees and features. Are their services within reach 24 hours a day, 7 days a week? Can you only reach them during the agreed-upon business hours?

Are their services limited to giving advice and pointing you to the right lenders? Or do they go above and beyond and handle everything from paperwork to the final touches too? Ask them about their complete service packages to get the best idea of what they can do for you. But never forget to bring up the topic of their service fee or commission rates.

Working with professional mortgage brokers is always a great investment. But just like a proper investment, you have to be smart and strategic on how you go about it.

Step 5: Find out which lenders they work with.

Another thing you should check is their list of lending partners. They do not have to work with 200 or more lenders to be considered good. They just have to be in partnership with a handful of lenders who offer highly diversified mortgage loan deals to give their clients enough freedom to choose. In some cases, they might even be able to arrange a deal for you outside of their panel of lenders.

Step 6: Learn insights from former clients.

If you really want to know whether the mortgage broker that you are eyeing is a good one or not, you can always ask the people who have previously worked with them. Granted this might take a lot more digging around than usual, the feedback you find will definitely be very helpful in solidifying your choice.

Now that you have an idea on how to start with your search for the best mortgage broker in Sydney, we hope that your home purchasing experience will be a smooth and stress-free one.

Need more help?

If you have got more burning questions regarding mortgage broking, then feel free to contact the experts over at Key Strategy Solutions. We house a team of experienced mortgage brokers in Sydney who are ready to provide excellent services at your beck and call. We can help you with your home loan, car loan, business loan needs and much more.

Learn more about how we can help you today, call us on 0488173353.

The 10,000 guarantees available via the new First Home Loan Deposit Scheme have been filled or reserved, but for those who missed out there’s a second chance coming soon in July.

There have been 5,500 guarantees issued under the federal government scheme, while another 4500 borrowers have guarantees reserved in the coming months.

The scheme, which was launched on January 1, can allow first home buyers with only a 5% deposit to be eligible to purchase a property without paying for lenders mortgage insurance (LMI).

This guarantee gives first home buyers a leg up into the property market, as it can save you as much as $10,000 in LMI insurance.

Get ready for round 2!

Now, even though the scheme kicked off at the beginning of this calendar year, the next phase is set to begin when the new financial year ticks over on July 1.

And you’ll want to be organised when July rolls around.

Let us explain why.

The 10,000 spots in the scheme are broken up into two lots of 5,000 – one half for two major lenders (CBA and NAB), and one half for 25 non-major lenders.

If you’re interested in applying through one of the two major lenders, it’s important to note that they go pretty quick.

In fact, 3000 of these 5000 spots were reserved in the first 10 days of the scheme being launched back in January.

With that in mind, if you’re interested in applying for the scheme through a major lender you’ll want to get in touch with us now so we can start getting organised.

Are you eligible?

In order to be eligible, first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both buyers need to be first home buyers).

There are also property price caps for different cities and regions across the country, which you can find out more about here.

Also, even though you may have a 5% deposit saved for a house, you still need to obtain finance approval from a participating lender.

And that’s where we can help.

We’re more than happy to run through the scheme in more detail and, if you’re eligible, help you apply for finance with one of the scheme’s participating lenders before places fill up again.

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.

Once again the Big 4 Banks have escaped major punishment and gotten exactly what they wanted: adding a multi-thousand-dollar tax on borrowing that’ll hit consumers and brokers hardest.

By now you might have seen some of the Royal Commission recommendations in their final report.

All in all, the banks got off with a very light rap on the knuckles – as indicated by all four banks having their best day in months on the ASX.

On the other hand, the existing business model for 20,000 mortgage brokers – most of whom run businesses just like ours – is at risk.

That’s because one recommendation made by the Honourable Kenneth Madison Hayne AC QC in the final report is to ban trail commissions on all new loans by July 1st 2020.

It’s then proposed that over the following two to three years, all other commissions be phased out, with mortgage brokers shifting to a consumer-pays model whereby borrowers foot the bill.

This is exactly what the banks want.

Because if implemented, the banning of mortgage broker commissions will strengthen the profits and position of the major banks and reduce lender competition substantially.

What this will save the banks

According to a report on ABC news, Credit Suisse says this move will collectively save the banks a whopping $1.8 billion over five years.

That’s a staggering amount.

Destroying the viability of the mortgage broker channel would immediately reduce competition and drive customers back into the banks with the largest branch networks.

With less competition, the banks will likely increase their rates.

MFAA CEO Mike Felton says these recommendations do not represent a good outcome for consumers.

“These policy recommendations are effectively a new multi-thousand-dollar tax on borrowing. They will put the broker channel at severe risk, damaging competition and access to credit and entrench bank power,” Mr Felton says.

“I fail to see how decimating the broker channel, leaving Australians with a handful of lenders to choose from, is good for competition, or good for customers. We are critical to the health of Australia’s mortgage lending market.”

The fallout

At this stage it remains unclear whether the Final Report is recommending a consumer fee-for-service or the so-called ‘Netherlands’ model.

“If the recommendation is a broker only consumer fee-for-service, that will mean brokers and smaller lenders will no longer be able to compete on a level playing field with the big banks with major branch networks,” Mr Felton explains.

“We know from recent, independent research that 96.5% of customers are not willing to make a payment to a broker of $2,000 and most are unwilling to pay anything at all.”

Meanwhile Peter White, managing director of the Finance Brokers Association of Australia (FBAA), says brokers should never have found themselves in the firing line.

“This royal commission is about the greed of the big banks and insurance companies, and so it should be because their behaviour has been appalling,” he said.

It’s not just the mortgage broking industry that’s been left dumbfounded by the recommendation. Here’s what Financial economist and Australian Financial Review contributing editor Christopher Joye had to say:

“The biggest winners from the royal commission are demonstrably the big banks while the largest losers are Australia’s mortgage brokers. Indeed, the top end of town have done an amazing job convincing everyone that brokers should be made the ‘fall guys’ for their own deeds, surreptitiously fattening their profits, despite no evidence of pervasive misconduct,” Mr Joye said.

What next?

For the time being, the recommendations remain just that: recommendations.

They’re not set in stone. Not yet.

Because while the Coalition and Labor have both said they’ll take action on all 76 recommendations in the report, there is an election coming up.

Enough noise made now could result in one of the two major political parties sitting up and taking notice.

That means there’s still time to let your local MP know that you’re happy with the way the system is and that you don’t want the banks transferring the costs of a mortgage broker onto customers.

If you’d like any further information on this issue, please don’t hesitate to get in touch.

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.

Ahh, the NBN. Depending on where you live it’s either lightening fast, or so agonizingly slow that you want to pull your hair out. Well, the good news is you could be entitled to a refund worth hundreds of dollars.

Over the last 15 months the ACCC has been negotiating with internet service providers to offer their customers a refund if warranted.

Telstra, Optus, TPG, iiNet, Internode, Dodo, iPrimus and Commander have each admitted that they likely made false or misleading representations about their connection speeds.

So now the ACCC is “urging” you to contact your retail service provider (RSP) to see if you’re eligible for a refund which, in many cases, is worth a few hundred dollars.

That’s a decent injection to help you pay off your mortgage, bills that have accumulated over Christmas, or even some spending money over the upcoming Easter holidays.

Why you might be entitled to a refund

Ok, so when you signed up to the NBN, the RSP that sold you the plan most likely advertised it with maximum theoretical speeds.

This might have looked something like: “100 megabits per second (Mbps) download and 40 Mbps upload” speeds – aka 100/40.

However, if you’re on a FTTN (fibre-to-the-node) or FTTB (fibre-to-the-building) plan, you probably aren’t getting anywhere near those speeds because there are existing copper lines connecting your building to the NBN network.

Put simply: copper = unreliable connections and slower internet speeds.

It’s mainly FTTP (fibre-to-the-premises) that can really reach the advertised theoretical speeds, as it doesn’t rely on any copper for the internet connection.

You have (unopened) mail

Since November 2017, the RSPs were meant to contact more than 142,000 affected consumers to offer them a range of remedies, such as moving to a lower speed plan of their choice, or exiting their contract and receiving a refund.

However, two in three affected consumers – roughly 100,000 households – have not responded to the letter or email from their RSP.

“They may be eligible for refunds, some in the hundreds of dollars,” says ACCC Acting Chair Mick Keogh.

“The ACCC is urging NBN customers to contact their NBN retailer if they have received a letter or email offer of a remedy, or think they might be entitled to a remedy.”

You might even be entitled to a refund if you’re a new customer, too.

Within four weeks of signing up, RSPs must check their speeds and if the speeds are below those advertised for the plan the consumer chose, the RSP must offer remedy options.

How much you could be refunded

Ok, let’s say back in December 2016 Anne purchased a 100/40 NBN plan from a Telco at a cost of $100 a month.

In December 2017, Anne would have received an email from her Telco advising that her connection was only capable of maximum speeds of 37 Mbps download and 13 Mbps upload.

This means she was unable to receive the full benefit of the 100/40 plan.

In the email that was originally sent, but that Anne missed or overlooked, the Telco offered her the following options:

Option 1 – Move to a lower plan of her choice, such as a 50/20 or 25/5 plan, and receive a refund of $360.

Option 2 – Exit the plan without cost and receive a refund of $360 for the difference in plan prices.

Option 3 – Remain on her current plan with no refund.

In this example, with a maximum speed of 37 Mbps download, Anne could receive the maximum speed of the 25/5 plan but not the 50/20 plan.

Therefore, Anne is entitled to a refund of $360, which is the difference between a 100/40 Plan and 25/5 Plan ($30 a month) over 12 months.

All she has to do is let her Telco know.

Your next step

This is the simple part. Simply get in contact with your RSP and see if you’re entitled to a refund.

The ACCC is on their case about it so it should be fairly straightforward and the customer service representative will know what you’re referring to.

Good luck!

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.