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Greater Bank: Lowest home loan hits Australian market at 1.69pc

Greater Bank: Lowest home loan hits Australian market at 1.69pc

Source: Financial Review

Australia’s home loans market has witnessed its lowest rate on record. But it’s not available to everyone, and there’s another catch.

Australia’s home loan market has witnessed its lowest rate on record, showing signs lenders are still willing to drop rates to attract new mortgages.

Customer-owned Greater Bank has dropped its one-year fixed rate to 1.69 per cent, the lowest owner-occupier loan on offer within Australia.

Greater Bank’s deal, which pays both principal and interest, is only available to customers in NSW, Queensland and the Australian Capital Territory.

RateCity research director Sally Tindall said while the one-year deal seemed highly lucrative, the revert rate was more than twice the cost.

The two loan schemes offered by the bank revert to an ongoing variable rate of 3.66 percent and 3.46 percent respectively.

“At 1.69 percent this is the lowest home loan rate we’ve ever seen, but it’s important to remember that it only lasts for one year.”

“While the revert rate is more than double the fixed-rate, borrowers could still potentially be better off if they keep on their toes and refix, refinance or renegotiate after the first year.”

RateCity calculations show borrowers would be $3849 worse off over five years if they decided not to switch their loan with Greater Bank after the 1.69 percent deal ends.

Smaller banks are dropping rates well below what the big four are offering in an attempt to try to claim as many customers within a crowded and competitive lending market.

What all you need to know about the First Home Loan Deposit scheme?

When it comes to applying for loans, it is very much important to acknowledge that there is a loan that is known with the name of First Home Loan Deposit Scheme has been designed to help those who come under the eligibility of the property market sooner. But do you know how it really works? And what are the requirements you need to consider to get this loan and if you are eligible how you can apply? Well, through this article, we will explore everything you need to know about the First Home Loan Deposit scheme that is very much important to invest.

 

Are you eligible for the First Home Loan Deposit scheme?

The first Home Loan Deposit scheme began on 1 Jan 2020. It allows the eligible first home buyers to purchase the property with a five percent deposit and without any need to take the lender’s mortgage insurance. According to the Accounts NextGen, the scheme doesn’t offer cash payment, you can use it in the conjunction with any other govt grants, schemes, waivers, and more.

 

First Home loan Deposit scheme new home guarantee

As a part of the federal budget set for 2020-21, the Australian govt has committed an additional 10,000 First Home loan Deposit scheme places for the 2020-21 financial year which is specifically eligible for the first home buyers purchasing new homes. There is a New Home Guarantee according to the Accounts NextGenand it has been established to support the Government’s economic stimulus set norms and hence can create jobs in the residential construction sector.

 

How to apply for the First Home loan deposit scheme?

The NAB ad CBA are two of the major lenders when it comes to the First Home loan deposit scheme. These two are selected to participate with a total allocation of 5000 grants that are shared between both parties. This clearly means that you can jump in and apply for a place in the scheme with the related estate norms that are described by Accounts NextGen.

 

Some of the listed lenders allocated the 5000 places

  • Bank Australia
  • Australian Military Bank
  • Bendigo Bank
  • Auswide Bank
  • Community First Credit Union
  • Beyond Bank Australia
  • Bank First
  • Defence Bank
  • Bank of us
  • Gateway Bank
  • G&C Mutual Bank
  • Mortgageport
  • CUA
  • People’s Choice Credit Union
  • P&N Bank
  • Queensland Country Credit Union
  • Indigenous Business Australia
  • QBANK
  • MyState Bank
  • Police Bank (including the Border Bank and Bank of Heritage Isle)
  • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
  • The Mutual Bank
  • WAW Credit Union
  • Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank, and UniBank)
  • Regional Australia Bank

 

Point to remember:Accounts NextGen explains that in order to apply to the scheme, you will be subjected to follow the eligibility criteria. You just need to provide certain documentation of the eligibility to secure the position.

 

What is the Eligibility criteria for First Home Buyers?

  • All the applicants must be eligible for getting into the First Home Loan Deposit scheme and must not have interest in the residential property. The individual applicants have earned less than $1,25,000 or the $2,00,000 for the couples in the last financial year.
  • The couples must be married or in a de facto relationship. Other persons buying together that are eligible.
  • All the applicants must be at least 18 years of age and have valid medicare care.
  • Applicants must have a deposit of between 5% and 20% of the property’s value.
  • All the applicants must be Australian citizens with a valid Australian passport
  • Your purchased property price must be within the property prices threshold according to the Accounts NextGen.
  • You can also check the property price cap for the area of the NHFIC online tool.

 

In a conclusive viewpoint:

By concluding this article we now hope that this piece of information has helped when you are planning to invest your hard-earned money in the First Home Loan Deposit scheme.

Can I get approval for my home loan amidst this COVID-19 crisis?

The quick answer to this question is Yes. Based on the data published by the federal government, more than 1 million people will be unemployed in the coming time. We are about to see such time only because COVID-19 has affected the economy very badly. The effects of this virus are widespread, but here, we will talk about home loan borrowers in particular.

The people seeking home loans are concerned about it because the lenders are coming with strict rules for approving a home loan. The policies governing home loan approval have changed so much because whole new factors are now considered for it. Take a look at the new conditions to get a home loan approved.

Income types

The main deciding factor is the income type nowadays. Due to the dwindling situation of the economy, the lenders are quite worried about whether the borrowers will be able to repay the loan or not. All those whose income is not stable as per the laws by the lenders have a higher risk of getting their loans approved. Here are the types of incomes that are considered unstable income:

  • Bonus income
  • Casual income
  • Workers on probation
  • Overtime income
  • Commission income
  • Contract income

Any employee whose income type falls in one of the categories mentioned above can face problems in getting his/her loan approved.

Living expenses

Living expenses will also be considered in the approval process. They will check your living expenses in the last 3-6 months. Many people started purchasing new things as they feared the shortage of materials in the market. And if you are also the one who spent money in the same way that we are talking about, getting approval will be difficult for you.

Rental income

The rental market is completely unstable at this time. Anyone who is relying on income from rent should know, this kind of income will not be considered as income anymore.

JobKeeper payments

In case you are getting any financial aid from the government, such a source will not be considered as ongoing income. Mentioning JobKeeper payments as a source of your income is not good.

As the JobKeeper was provided to only those whose income fell by at least 30% due to COVID-19. Such a significant fall in your income is not going to help you in getting approval.

Important questions that you can expect from them

Lenders are looking for security in terms of your income. They are going to ask you a lot of questions. All these questions are to check the status of your income amidst this pandemic. Such questions help them a lot in knowing your repayment capabilities. Here are some of the most probable questions.

  • Have you got any message from your employer about reduced hours as an impact of COVID-19?
  • What’s your job status, and is it affected by COVID-19? If Yes, then how?
  • What are the impacts of COVID-19 on your business?
  • Have you lowered the rent income from any of your properties?
  • Are there any plans that you think would affect your financial situation?
  • What do you think about returning to your normal financial situation?

Employment check

The process to check your employment is done just a few days before the approval of your loan. It is done to check whether you are still having your job as you described in the form. You are going to be in trouble if you fail in this employment check. Here are some questions that you can expect from it.

  • They may ask if you are still employed, and they can also call your employer.
  • You will also be required to fill a form about it and produce the last payslip.

How can you get this approved?

Based on the things mentioned above, you must have known that your income is a thing that matters the most here. If you want to grab the safe spot, you should submit several documents for it. Take a look at the documents you should submit:

  • Submitting only payslips is not enough. You should submit your PAYG income summaries.
  • If you are self-employed, you need to submit even more documents about your income.
  • For those who rely on rents as their sources of income, you need to provide at least three years of your rental income history.

The time involved in this process

This is one of the most important things to know when you are getting your loan approved. In most cases, this process can get up to 20 business days.

Conclusion

After considering all the factors mentioned above, if you think getting approval is almost impossible, you are wrong. This can be one of the greatest times to get a loan. Right now, you can find fixed-rate home loans at the lowest interest rates. The government has also given several incentives and financial aids for the first home buyers.

Importance of your Home Loan choice

In Australia, the spring property season is about to arrive. And this year is quite exceptional. As the effects of Corona are fading away, the federal government is introducing numerous grants and incentives to get the economy back on track. Here, we are going to discuss the importance of your home loan.

The price of properties in most prominent cities of Australia has fallen which is another great reason to buy property, especially for the first home buyers. As per the latest reports, the home loans for first home buyers has increased by 14%.

People look for various factors when they buy homes. A good home loan is always the most important factor to consider before buying a home.

  1. You could save a lot of money if you choose a better home loan:
  • Several people don’t believe it but you can save a lot of money if you have an appropriate home loan. The amount of interest that you pay over the lifetime depends a lot on the interest rate and the size of the mortgage. If you have a loan worth $400,000 and the interest is 3.33%, you will have to pay $189,863 and for the same loan, if your interest rate is 2.50%, the total payable interest would be $138,340. This is the amount of difference
  1. Loan affects your required deposit:
  • Normally, you need about a 20% deposit before getting any loan for your home. And if someone has a deposit of less than 20%, most of the banks demand LMI (Lenders Mortgage Insurance) from the borrowers. If you start searching for good loans, you can get various loans with just 10% or even 5% deposits.
  • One thing you have to make sure that if you opt for a bigger home loan, you will get to know repayment will be even bigger. These low deposit home loans are just for making the first home buyers able to get in the market quickly.
  1. Check for the useful features:
  • There are different features associated with the loans. Some of those features are useful and you have to consider it. Some extra costs are also associated with a loan and you need to be aware of them before you get that loan. Always try to get the mortgage having a great rate and other useful features.

Conclusion:

Anyone needs to be very careful about choosing a home loan. The buyers need to be aware of all the features related to the loan you have to opt.

How to apply for your First Home Owner Grant

First Home Buyer Grant worth $10,000 is available for all those who are either buying or building a new home. And this grant’s value is about $20,000 for those who buy a new home or build a new home in regional Victoria. All those who have signed the contract of their home between 1 July 2017 – 30 June 2021. One thing that you have to keep in mind is the home you are about to buy or build should not be a holiday house or an investment property. In the later sections of the blog, we will also talk about First Home Loan Deposit Scheme.

Who is eligible for this scheme?

There is a very simple way of checking your eligibility for this scheme. If you open the Application for First Home Owner Grant and then answer the seven questions. Your answer to these 7 questions will determine whether you are eligible for this scheme or not. If any of the cases mentioned below are true for you, you may not be eligible for this scheme:

  • if you have owned a home or any other residential property in Australia before 1 July 2000.
  • If you have been living in a home for the last six months continuously that you have either owned completely or partly.
  • If you have got the grant of the first-home owner in Australia.

Even if you own a home in Australia that you bought on or after 1 July 2000, and have not lived there as your home you are eligible for this scheme.

These are the conditions that can make your eligible for this scheme:

  • In case you have occupied a home as your principal place of residence and are living there for the last 12 months and you should be 18 years old or more.
  • You should be an Australian citizen or a permanent resident of this country.

Required documents to apply for this grant:

There are two ways you can apply for this scheme. You can do it with the help of a registered agent or with an official government department responsible for this scheme.

For those who are using a registered agent for this purpose, you have to give him the document showing your primary identity. But those who are applying with the help of an official government department have to provide a document for each of the four categories mentioned below:

  1. 1st Category:
  • You have to provide proof showing that you are a citizen of this country. For those who are Australian citizens have to provide the following documents:
  • A certificate showing that you are the citizen of Australia.
  • Current Australian passport.
  • Birth certificate issued by Australian Registry of Births, deaths, and marriages.
  • For the citizens of other countries:
  • Proof of permanent residency.
  • Current passport.
  • For a citizen of New Zealand:
  • Only a current passport.
  1. 2nd category:
  • In this category, the documents are needed to show the identity of the person. You can provide the following documents:
  • Firearm license.
  • A current passport.
  • ID card showing your photo and age.
  • Driving license.
  1. 3rd Category:
  • Proof showing that you are living in Australia. The documents needed to prove it is:
  • Department of Veterans’ Affairs or Centrelink card.
  • Document showing the registration of your motor vehicle.
  • Medicare card
  1. 4th Category:
  • Proof showing your or your spouse’s current residential address. These are the required documents for it:
  • Electricity bills, gas bills, or water bills.
  • Contents insurance policy or building insurance policy.
  • Rate notice.
  • Your electoral enrolment card.
  • Assessment notice for taxation.
  • Agreement of lease or tenancy.
  1. There are several other evidence you have to present:
  • If you are married, you have to present a marriage certificate.
  • Divorced persons have to provide a divorce certificate.
  • Widowed individuals have to provide the death certificate copy of their spouse.

Completing your application:

You don’t have to know about the guidelines if your work is being done by a registered agent. But those who are doing it on their own have to read the guidelines properly. Make sure you know about every guideline before submitting your application. The First Home Owner Grant (FHOG-Form-02) needs to be printed and then signed by the applicant before lodging the application.

Lodge the application:

In case you are using an agent for this purpose, you need to sign the application and your agent will do the same. And if you are doing it by yourself, you need to mail the application to the following address.

State Revenue Office

GPO Box 1641

Melbourne

VIC 3001

Or

State Revenue Office

DX 260090

Melbourne

The First Home Loan Deposit Scheme:

This scheme was introduced in the Federal Budget for the year 2020-2021. There is an arrangement for 10,000 more Aussies to buying new homes. This scheme is very essential because those people will get to live in their homes by paying only 5% of the total amount. This is a huge relief for such people as people had to pay at least 20% of the total amount.

How to apply for it?

There are various lenders who have participated in this scheme. You can contact anyone of them for grabbing this scheme. The time when you apply for this scheme will decide whether there is a home available for you. If you opt for a loan that is supported by this scheme, you can apply to more than one lender at a time.

Eligibility:

There will be different tests. These tests would be regarding different aspects of your life and they include:

  • A requirement of owner-occupier.
  • A deposit requirement.
  • Test whether you are of the required age.
  • Test regarding your prior property ownership.
  • An income test.

Conclusion:

The date on which you will receive the grant depends on whether you are buying a home or building one.

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