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There’s good news for homeowners and first home buyers on the horizon with the Federal Government reworking current credit laws to make it easier for people to refinance, get a mortgage for the first time, or a business loan.
So what does that mean for you?
By Julie Nipperess
Well, it’s a pretty good time to enter the property market.
Despite the pandemic-related recession, property prices have stayed strong. In fact in some regional areas, they appear to be increasing. With interest rates so low (and going nowhere for a while yet) it’s a good time to consider buying property.
With the Federal Government also making changes to credit laws, mortgages, personal loans and business loans will be easier to access, as part of stimulating the post pandemic economy, you can benefit.
If you’re an existing property owner with a mortgage, after the new regulations come into effect (planned for March next year), it will be a good time to review your mortgage, and shop around for a better deal.
But there’s good news for first home buyers too. The Federal Government has announced that the First Home Loan Deposit Scheme will be available from mid-October until June 30 next year, allowing eligible first home buyers to obtain a loan for a new home with a deposit of as little as 5 per cent, with the government guaranteeing up to 15 percent of the loan.
Loans are capped at $950,000 for Sydney, $850,000 for Melbourne and $650,000 for Brisbane. This scheme has already helped about 20,000 first home buyers and it can
be used in conjunction with the HomeBuilder grant which provides grants of up to $25,000 for new homes and major renovations.
Both of these national schemes are in addition to the existing New South Wales First Home Buyers Scheme which operates on a state basis.
This is a $10,000 grant available eligible first home buyers who purchase:
Existing homes may qualify if:
Another option for first home buyers is the guarantor home loan, available through most lenders. This is not a Government scheme, it’s simply a type of mortgage, but one which people sometimes overlook.
A guarantor home loan allows close family members or relatives to ‘guarantee’ your loan. This means they will be responsible for paying back the loan if you can’t. A guarantor usually has to offer equity (such as a percentage of their own home) as security for part or all of your mortgage.
The homebuyer is still responsible for the repayments, but the guarantor will be liable if you can’t meet them. So it is a big decision for the guarantor and there are options for guarantors to guarantee only a portion of the loan,
Many people shy away from the financial commitment of owning property because, remember, that in addition to mortgage payments there are rates, and potentially strata fees, insurances and maintenance costs, but in all honesty, market cycles aside, if you choose property wisely and hold on for the long term, then you will reap the rewards. You’ll always have somewhere to live, or something to sell and upsize, or keep as an investment down the track, depending on how your life changes over time. Debt can be scary, but if managed wisely, it can also help you get ahead.
The key is to get professional financial advice to work through the numbers and potential loan options, as well as devise contingency plans and exit strategies … just in case. But with so much government assistance right now, it’s worth looking into what you might be entitled to.
This is general advice and should not be treated as personal advice.
Julie Nipperess is an authorised representative of Step Up Financial Group Pty Ltd ASFL No: 512509.