Weekly wrap - Saturday 26th June
Let's talk about what's trending in lending this week: including changes in bank policies in regards to COVID for self-employed, and some interesting information about the First Home Loan Deposit Scheme.
Bank policy changes in regard to COVID for self-employed
During COVID, we needed to get BAS (Business Activity Statements) to show how the business was trading right now, comparing that to tax returns, or interim P&Ls (Profit & Loss). A lot of the banks are now starting to get a bit more relaxed about that. We've seen a number of the banks start to revert back to the pre-COVID policy.
But this week, one of the four major banks said that the COVID policy - so the additional layer of verification specific to the self-employed side of things - was now becoming permanent. This bank was previously known to be quite favorable in the self-employed space. They actually had some really great policies. And now, they're probably one of the more conservative. It can be very frustrating for a self-employed client to be loyal to a bank for 10 or 15 years, do all the right things, and be told that suddenly you don't qualify.
That's why your trusted A-team of brokers is so valuable: we know these things, and we know where we need to go to get you the very best outcome.
We’ve seen some banks relying more on accountant's letters, which has been a really interesting shift, and even a few that are saying, "Look, we'll actually overlook 2020, because we know for some businesses it was really hard. We'll actually work on your 2019 financials, and if you can show your business is doing okay, we'll actually work on that." So that's really favorable for certain types of industries.
If you are self-employed, we are the people to call!
The First Home Loan Deposit Scheme is back
This is exciting. Further good news: there are 10,000 spots for established and 10,000 for new, while it had traditionally just been for brand new builds. And they've also raised the limit for the purchase price, to be a bit more in line with the market in some areas. We do have some banks now taking pre-approvals as well, getting you on the list, which is exciting because a lot don't as the spots technically don't come out until the 1st of July.
And because not all banks are doing that, you need to call your broker.
There are income caps, which are Government (not bank) requirements for the First Home Loan Deposit Scheme, so if you are nabbing a spot from the 1st of July, you will need your '20, '21 Notice of Assessment.
If you're a first home buyer and you want to jump on that scheme, remember that 10,000 spots for each sounds like a lot, but there are 150,000 to 200,000 first home buyers every year, and these spots go like hotcakes. So you need to get your tax return organised and lodged ASAP because you must have your Notice of Assessment to show that you meet the income criteria for the Government before you'll be able to go unconditional.
Please reach out, we’re here to help!