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\nFirst things first, if you still have your job and it\u2019s as secure as it can be - there is no reason why the coronavirus should change your plans of home ownership - whether you\u2019re planning on being an owner-occupier or investing. In fact, with <\/span>interest rates the lowest they\u2019ve ever been<\/a><\/strong> and market volatility creating some flexibility on price and more opportunities, it might be an even better time to buy. However, the world is a very different place to the one it was a couple of weeks ago, so it doesn\u2019t hurt to spend some time figuring out if it\u2019s <\/span>still<\/span><\/i> the right time for you to buy your first home.\u00a0<\/span><\/span><\/p>\n <\/p>\n If you\u2019ve lost your job or income<\/b><\/span><\/p>\n Firstly, we\u2019re really sorry. That <\/span>sucks<\/span><\/i>. And it\u2019s no doubt made an already stressful time, even worse. Unfortunately, if you've lost your job, had a reduction in income, or are feeling uneasy about your employment as a result of COVID-19, then it's probably best to wait until things stabilise for you before you sign up for what\u2019s probably the biggest purchase of your life to date. Not only do you not need that kind of extra stress, but the banks might be less likely to lend to you now you\u2019ve lost your income. So, probably not what you want to hear right now, but #rona is creating some pretty unpredictable times and it\u2019s better to err on the side of caution.<\/span><\/span><\/p>\n <\/p>\n If your deposit was held in shares<\/b><\/span><\/p>\n If you\u2019d been holding your deposit in the share market, as opposed to a savings account or term deposit, it\u2019s probably taken a bit of a hit and reduced significantly in value due to Coronavirus. This could mean that you need to hold off on buying your first home until their value returns to pre-COVID-19 levels, though there\u2019s no guessing how long that might take. That said, you might be able to still purchase your first home with a smaller deposit taking advantage of government schemes like the <\/span>First Home Loan Deposit Scheme<\/a><\/strong>, so just <\/span>get in touch with us at Pure Finance<\/a><\/strong> to see what\u2019s possible.<\/span><\/span><\/p>\n If this sounds like you, our good friends at Fox and Hare have put together <\/span><\/i>some info on what to do in a share market downturn.<\/i><\/a><\/strong> (Hint: panic selling is NOT one of them.)\u00a0<\/span><\/i><\/span><\/p>\n <\/p>\n If you still have your job and your deposit<\/b><\/span><\/p>\n Phew! You still have your job or income, your deposit is in tact, and you are still feeling confident enough to buy your first home - here\u2019s what you need to know:<\/span>\u00a0<\/span><\/span><\/p>\n <\/p>\n In a somewhat fortuitous twist of fate, some industries are having to catapult themselves into the 21st century now that they can no longer do \u2018business as usual\u2019. Real estate is one of them, banking is another. With no face-to-face auctions or group property inspections - <\/span>real estate agents are having to find new and creative ways of selling houses<\/a><\/strong>, and with no face-to-face verification, banks are now accepting identity verifications online instead of the usual in-person rigamarole. But - make no mistake - <\/span>properties are still selling<\/a><\/strong>. While you might not be physically jostling amongst dozens of other potential buyers; auctions are now taking place online, inspections can be made by private appointment, and agents are even conducting virtual tours on Zoom. <\/span>Recent auction clearance rates<\/a><\/strong> suggest that buyers are still buying and sellers are still selling. While, in some ways, the real estate market has a \u2018new look\u2019, the basics of property investment have stayed the same. This <\/span>guide to the Australian property market during COVID-19<\/a><\/strong> by Domain.com.au is a great place to start for the latest on online auctions and market updates.\u00a0<\/span><\/span><\/p>\n <\/p>\n <\/p>\n Borrowing money is the cheapest it's <\/span>ever<\/i><\/b> been, meaning that: <\/span>repayments are as low as they\u2019re going to get<\/a><\/strong> and great deals are available. \u2018Lenders wanna lend\u2019 and they are open for business. However, if your income has been affected or you\u2019re part of an affected industry, then the bank is likely to want even more evidence than normal that your employment is stable. Regardless of whether interest rates are low, it\u2019s important to safeguard yourself against future uncertainty and instability by having a strong cash buffer and not stretching yourself too thin to afford repayments.<\/span><\/span><\/p>\n <\/p>\n <\/p>\n In terms of investments, of which buying your first home is certainly one, purchasing property is a longer term commitment (i.e. 5+ years). We expect that anyone who buys right now and then looks to upgrade or sell in 5+ years will do well on their property. As long as you can afford the repayments, and when you do sell, it\u2019s at a time you\u2019ve decided is right for you (and not because you\u2019re forced to) then you can't really <\/span>lose<\/span><\/i> money.<\/span><\/span><\/p>\n So, keep in mind that you need to think about your longer term goals and what you <\/span>actually<\/span><\/i> want before signing on the dotted line. If you want a home to live in and you are able to get something right now at a slightly reduced price due to COVID-19, then go for it, and get off the rental wagon. Or,<\/span> if you're looking to \u2018rentvest\u2019<\/a><\/strong>, then keep in mind that over the next six months we expect that rental income will be lower than normal or you might have trouble getting tenants at all (<\/span>see here for more on the questions you should be asking yourself before investing in property right now<\/a><\/strong>). So, you must factor this into your budget. If you\u2019ve run the numbers and figured out that you can afford to hold the investment with lower rent for the first six months, then also go for it!<\/span><\/span><\/p>\n <\/p>\n <\/p>\n Naturally, everyone wants a good deal when they buy but then wants a big sale price when they sell - but things don\u2019t always work that way! In terms of what\u2019s ahead - it\u2019s hard to know what to expect. While it\u2019s hard to know when the global economy, or Australia\u2019s economy, will fully recover from the impacts of coronavirus, we do anticipate that the property market will bounce back quicker than most. Generally speaking, <\/span>uncertain or volatile markets can mean more flexibility with sellers and more opportunity<\/a><\/strong> for those with stable jobs looking to buy. While trying to predict the market\u2019s ebbs and flows is a bit of a fools game, waiting for it to \u2018recover\u2019 might mean you miss the boat in terms of that greater flexibility and opportunity. Frankly, few people look back after five years and wish they hadn\u2019t bought a property - so if you have already been pre-approved, now\u2019s arguably as good a time as any.\u00a0<\/span><\/span><\/p>\n <\/p>\n <\/p>\n While there\u2019s no COVID-19-specific support for first home buyers, there are plenty of Federal and state-by-state support packages available to get you into your first home. Coming into effect on 1st of January 2020, the Government\u2019s new <\/span>First Home Loan Deposit Scheme<\/a><\/strong> is for those looking to buy their first home but who don\u2019t have a 20% deposit. Normally, you would be required to take out <\/span>Lenders Mortgage Insurance<\/a><\/strong> (or LMI), but under this Scheme, <\/span>the Government effectively provides you with a deposit guarantee<\/a><\/strong>.\u00a0<\/span><\/span><\/p>\n The Scheme was originally limited to 10,000 places with successful applicants having to find a property within 90 days of approval. Due to COVID-19, the National Housing Finance and Investment Corporation (NHFIC) \u2013 the government body in charge of the Scheme \u2013 <\/span>announced they\u2019re giving lenders the ability to extend places by a further 90 days<\/a><\/strong>. With a further 10,000 places set to open up in July, it might be time to brush up on <\/span>how the First Home Loan Deposit Scheme works<\/a><\/strong> and apply if you haven\u2019t already.\u00a0<\/span><\/span><\/p>\n In terms of other support available specifically for first home buyers, there\u2019s also the <\/span>Stamp Duty Concession<\/a><\/strong>,<\/strong> the <\/span>First Home Super Saver Scheme<\/a><\/strong>,<\/strong> the <\/span>First Home Owners Grant<\/a><\/strong>,<\/strong> as well as the <\/span>First Home Loan Deposit Scheme<\/a><\/strong> (four in total, with varying property value limits up to and between $650,000 - $800,000). We know that\u2019s a lot to get across, so feel free to <\/span>get in touch if you want us to walk you through them<\/a>.\u00a0<\/strong><\/span><\/p>\n <\/p>\n <\/p>\n <\/p>\n While everyone\u2019s situation is different, and you are best to <\/span>talk to a mortgage broker<\/a><\/strong> about your specific scenario, the short of it is that our tips for first home buyers are no different to what we would say if there wasn\u2019t a global pandemic...\u00a0<\/span><\/span><\/p>\n1. The market\u2019s gone virtual, not virtually gone<\/b><\/span><\/h2>\n
2. Interest rates are at their lowest ever\u00a0<\/b><\/span><\/h2>\n
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3. Make sure you\u2019re in it for the long haul<\/b><\/span><\/h2>\n
4. There\u2019s no such thing as the \u2018right\u2019 time<\/b><\/span><\/h2>\n
5. The First Home Loan Deposit Scheme has been extended due to COVID-19<\/b><\/span><\/h2>\n