FHLDS and FHSSS questions

Hi.

Wondering if anyone can answer some questions I have as a FHB and using government schemes listed above. Not able to find answers to below.

1. Can I be allocated a fhlds spot before my savings are 'genuine? Say I am waiting until early august for some of my 5% deposit to be genuine. Can I secure a spot 1st of July or any moment before?

2. Can I withdraw FHSSS and let it sit in a savings account while in the genuine savings 90 day period? Or will it reset the 90 days to do so?

Thanks in advance for your help

 

Not sure about the first question, but you really do need the 5% genuine savings before you can apply for a FHLDS reservation.

The reason is as soon as you get the reservation, you need to apply for and receive a pre-approval within 10 days, or you loose the reservation. You won't get the pre-approval unless you have the genuine savings.

Don't get too concerned about getting a reservation. The CBA and NAB have been completely over subscribed, they were and still are a complete mess. There are reservations available in the second tier lenders. I don't think this will change with the July allocations either.

 

I had 2 questions. Are the second tier lenders usually lenders you would use ? And are the products offered in the scheme limited, no offset, no ability to pay extra, redraw, split ? For example, if someone had a 16% deposit and was able to get lending with a guarantor to avoid LMI, would the products on offer in the FHLDS with the second tier lenders be as flexible.

 

The lenders I've used all were second tier banks with full (and proper) offset accounts. Some are actually offering better deals under the FHLDS than their regular products. Some of the rates and products have been superior to what the CBA and NAB offer.

I haven't used these lenders for investors, but that's not really their ideal profile anyway. I have used them for regular first home buyers as well that can't access the FHLDS.

Using a guarantor is really not that different than using the FHLDS, but a family guarantee is a bit more complicated and actually more work. Also why put your family's property at risk if the government will take on that risk instead?

 

Do you see alot of these reservations rolling off due to unemployment?

 

I don't think the full impact on people not buying has hit yet. Purely cause these approvals last for 90days.

Wouldnt suprise me if more spots are placed back on the market in the coming months.

Also there are spots left over currently.

 

If they haven't already expired, they won't until the next allocation in July. The current allocations with the CBA & NAB were issued in January for 90 days. The COVID crisis made the government extend these allocations another 90 days, so they effectively go to July.

As I have indicated, there are places available with the second tier lenders. This scheme is accessible right now, just not with the majors. Many of the second tier lenders are regular banks, just like the majors, with competitive products, with the same features.

 

Have you seen much in the way of what happens on FHLDS apps that have a contract slightly over the cap limit?

Eg if someone signed a contract at just above the cap, does the bank usually just adjust the valuation to be within the cap and ensure the buyers deposit is still good?

 

I haven't seen this, but I imagine that if you exceed the limit, you're not eligible.

 

Peter check this out under “issues with valuation” be keen to get your take on it.

The First Home Loan Deposit Scheme [CPD Quiz] | Money & Life

 

The most clear evidence of the value of a property at any given point in time is the figure at which two people decide to exchange the property between themselves. It's incredibly rare for a property to be valued differently to the purchase price. When it does happen there's a very extreme reason for it.

If a property were under the purchase price, I imagine it would be a significant problem even with FHLDS. Under the scheme lenders are providing 95% of the valuation figure. A low valuation means the borrower has to come up with more and the government guarantee isn't going to front the cash for this. It would likely mean the purchase would fall over.

My overall observation is people stress a lot about valuations when purchasing properties, but my experience is that this is the least likely problem to come up. Save your stress for something else.

 

100 % agree, and it put downward pressure on prices.