We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack.
Have you heard about the federal government’s Home Guarantee Scheme? (previously called the First Home Loan Deposit Scheme).

It allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI)

First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

But once July 1 arrives, competition for the 35,000 spots will be fierce, so here’s how to give yourself the best possible chance of securing a place.

Get the jump on the competition
End-of-financial-year: it’s a phrase that usually sends a shiver up your spine.

But getting your 2021/22 tax return in order asap can give you the inside lane when it comes to jagging one of those 35,000 FHB spots come July 1.

That’s because lenders require your most recent financial information when assessing your home loan application, and that will most likely include your latest tax return.

So now is the time to:

1. Speak to your employer to make sure they’ll provide your PAYG summary in a timely fashion.

2. Book an appointment with your accountant in July (before availability fills up).

3. Start compiling all your work-related expenses.

How we can help
Getting your tax return completed is just one (important) step in the process.

But it’s far from the only one.

When assessing your application, lenders require you to provide them with an accurate picture of your monthly expenses and discretionary spending, which can take a little time to put together.

And that’s where we come in.

Not only can we help you calculate your monthly budget – which includes your income and expenses – but we can help you crunch those numbers to give you an idea of your borrowing capacity, and therefore, what you can afford to buy.

This is especially important if you want a spot in the Home Guarantee Scheme because it has borrowing caps depending on where you want to buy.

And lenders these days are increasingly strict when it comes to your debt-to-income ratio and home loan serviceability – both of which contribute to your borrowing capacity.

Last but not least, you might have heard that interest rates are almost certain to increase over the next 12 months – so it’s also important to factor in a little buffer if needed.

Get the ball rolling today
Places in the Home Guarantee Scheme are generally allocated on a first-come, first-served basis.

And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.

So if you’re a first home buyer looking to crack into the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, help check if you’re eligible, and take steps to get the ball rolling.

Then when spots become available on July 1, we’ll be ready to help you apply through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or 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.

Pictures of varying shapes are located here

Original image URL located here

High-resolution image download here

Social media teaser. We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack. 👇

With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough. Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements.
In the past, if you were unable to meet your loan repayments, you could enter into a financial hardship arrangement with your lender and it couldn’t be reported in official credit reporting systems.

In many cases, the repayment history in your credit report would show a blank month or possibly a missed payment during the hardship arrangement period.

Neither of these two approaches told the full story about your credit history and that a financial arrangement had been agreed upon with your lender.

So what’s changed from 1 July 2022?
Ok, so from July 1, the credit reporting system will introduce financial hardship information into credit reports.

This means that if you enter into a financial hardship arrangement that reduces your monthly loan repayments, then for the next 12 months your credit report will show:

– that you were current and up to date with your payments for that hardship month, provided you made your reduced payments on time; and

– a flag alongside your repayment history information for the hardship month, indicating a special payment arrangement was in place.

The flag in the credit report will be referred to as ‘financial hardship information’ and can take two forms (A or V) depending on the type of arrangement:

A indicates there was an arrangement for the month that temporarily deferred your repayments (which will need to be repaid later or be subject to a further arrangement).

V on the other hand means the loan was varied that month to reduce your repayments.

The good news is that the financial hardship information flag will only stay on your credit report for 12 months, whereas regular repayment history information stays for 24 months.

So is all this good or bad news?
Well, like most changes in life, it comes with pros and cons.

The changes are intended to give you the ability to ‘protect’ your credit report if you experience financial hardship – in no way are they designed to exclude you from applying for credit.

However, a financial hardship arrangement flag may prompt prospective lenders to make further inquiries to better understand your situation.

If, for example, the hardship arose because of a temporary reduction in your work hours, but you’re now back in stable employment, in most cases it shouldn’t cause any major issues for your loan application – especially if we can provide proof to your prospective lender.

Additionally, hardship arrangements can stem from a natural disaster that’s completely outside your control, such as a flood or bushfire, which can be explained to a lender.

Importantly, the financial hardship information cannot be used by a credit reporting body to calculate your credit score, whereas regular repayments that are missed outside a hardship arrangement will impact your credit score.

Having trouble meeting your repayments? Get in touch
As you’ve probably noticed, the Reserve Bank of Australia has been aggressively raising the official cash rate in recent months, which means your monthly repayments would most certainly have gone up if you’re on a variable loan rate.

And if you’re on a fixed loan rate, you also need to think ahead to what your monthly repayments might be when the fixed-rate period ends and reverts to a variable rate.

So if you think more rate rises may soon strain your monthly budget, now is a good time to start putting extra money away into an offset or savings account to build up a buffer.

Other options we can help out with are refinancing and debt consolidation, both of which can help reduce your monthly repayments.

Whatever your circumstances, we’re here to support you however we can over the period ahead.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or 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.

Pictures of varying shapes are located here

Original image URL located here

High-resolution image download here

Social media teaser. With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough.

Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements.👇