Covid-19 and new home loans

Discussion in 'Loans & Mortgage Brokers' started by AbleTasMan, 21st Mar, 2020.

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  1. AbleTasMan

    AbleTasMan Well-Known Member

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    So before the current Covid-19 situation we are in I was on track to buying my first home. I had saved up a hefty deposit and was on my way to organize finance. Then I lost my job. The whole industry I work in has been demolished. This is most likely temporary, but does temporary mean 2 months? 6 months? 1 year? nobody knows.

    So is it still worthwhile pursuing buying? Will a bank approve a loan now that I have no current employment? (though I do have enough saved for a deposit and an offset account that could guarantee the loan and living costs for 3 years). And will they honour the 6 month mortgage freeze for new buyers?

    Also is the current market still worth buying into, or with the rumors of a recession looming is it worth waiting a while and see if prices drop (reports of 5-20%)?
     
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  2. The Y-man

    The Y-man Moderator Staff Member

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    I'd wait until you get another job sorted.

    You may need the money you saved for other things to tide you over (for some bizarre reason toilet paper comes to mind.... not sure why....o_Oo_Oo_Oo_O).

    The Y-man
     
  3. AbleTasMan

    AbleTasMan Well-Known Member

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    This is good advice thanks, and I plan on trying, not easy atm though (a new job could be a long way away in the current climate).

    Main take away questions though: Will a bank give a loan in this situation? will they give the 6 month freeze? Do house prices generally fall in a recession? (or natural disaster scenario like this).

    I have sat down and worked out my living expenses and the numbers do look good for up to 3 years living costs, so I'm not to concerned if I need to do that. I'm also expecting the government to have increased pressure to have a stimulus package that includes those who have been forced out of work.
     
  4. The Y-man

    The Y-man Moderator Staff Member

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  5. mikey7

    mikey7 Well-Known Member

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    I'd be waiting to see what happens. As you said - you don't know how long this will take.
    What if you get the virus with complications and insurance doesnt cover the majority of it? 3 years savings gone..
     
  6. AbleTasMan

    AbleTasMan Well-Known Member

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    I'm self isolating like every responsible citizen should be. I'm staying at home for 90% of the week, only going out to go to the supermarket. Also, I'm in Tasmania where we've imposed some of the toughest boarder controls in the nation. The tough lock-down stance is basically why I'm out of work, and doubting any work is going to be around while these measures are in place.

    However, I do feel we could be the first state out of it, maybe even in 30 days if we keep all international and even domestic travel under lock and key. Like anyone, I could still get it but I'm highly doubting it from these measures.

    That said, the property market could stagnate and there could be good buying opportunities I don't want to miss out on. It's all just a bit frustrating.
     
  7. AbleTasMan

    AbleTasMan Well-Known Member

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  8. Morgs

    Morgs Well-Known Member Business Member

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    Sorry to hear about that, a common story unfortunately at the moment!

    You will need to disclose your change in circumstances to the lender. You may have a pre-approval now but that is based on your old employment. Many lenders will request updated docs like new payslips for formal approval so if you've committed to a new purchase and it can't proceed with the lender then you may be liable to lose your deposit at the least.

    Or even worse, you manage to get through the approval, settle the loan/purchase without the ability to repay it and lose the house as a result. A lender doesn't want to put anyone in this position (nobody does). I don't know if they'd honour the 6 month freeze if they found out you'd already lost your job prior to the purchase and you didn't disclose that, I suspect not.

    Hopefully it all blows over quickly and you can get back on track :)
     
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  9. AbleTasMan

    AbleTasMan Well-Known Member

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    Yeah me too, it's really messed up my plan fo 2020, as like a lot of other people I suspect!

    Just to clarify, I hadn't approached a mortgage broker yet, coincidently I had planned to make an appointment to go see one during the week, that's before I got laid off, how's that! So nothing had been started on the finance front.

    I'm self employed, was working in what I could describe as casual full-time for one place for the last 2 years... actually more than full-time as recently I had worked a few 60-80 hour weeks. Why they never put me on full-time beats me (but that's another story). So I'd be using tax returns for the loan (I have no payslips as I invoice them).

    I do have enough saved that I 100% would be able to settle and make repayments for 3 years (plus living expenses), but that's not very ideal (obviously I'd prefer to have an income coming in and my savings in an offset account to reduce interest - that was the plan).
     
  10. AbleTasMan

    AbleTasMan Well-Known Member

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    So JobKeeper was launched today which will pay people fortnightly to (theoretically) stay employed (even though they may not be working). As far as I know this isn't welfare, but an actual income (but paid on behalf of the Government).

    Following up on my questioning, can anyone guess if this will improve the chances of getting a home loan, either now or in the future?
     
  11. Jobeki

    Jobeki Active Member

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    I think you will find it is paid to employer/businesses to encourage them to not lay off staff ie. the $1500/fn will pay/part-pay each employees income in businesses where revenue has dropped >30% (or >50% for big business). So no it won’t improve any individuals serviceability hopefully just reduce job losses and thus maybe keep the economy from collapsing due to massive unemployment and/or business closures
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member

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    Universal Income

    Has been talked about a lot over the last 10 years or so

    ta

    rolf
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member

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    Nah, its a short term benefit.

    Lenders wont lend on a 30 yr loan term on a 6 to 12 mth likely benefit.

    As as today, most lenders want at least 5 years for thing like Family Benefit.

    ta
    rolf