First home buyers will have another government support scheme from Friday. (Source: Clare O’Neil/x/AAP)
First home buyers hoping to get into the market by the end of the year are being warned to remember to give themselves plenty of time to get all their ducks in a row with the shutdown period over Christmas and News Year’s Eve looming. Because getting caught out could be costly and much more stressful.
Sydney mortgage broker Nathan Linton told Yahoo Finance he has seen “massive” demand in the sector in recent weeks. He is urging buyers to ensure they allow enough settlement time because “the whole industry slows down” in the weeks ahead – and processing times have already been blowing out due to rising demand.
“The first home guarantee changes have spurred a lot of interest. I went from getting about one or two inquiries a day to about four or five,” he said.
RELATED
Linton pointed to the huge expansion of the 5 per cent deposit scheme as fuelling the current market frenzy, but also rising investor interest and mortgage products such as UBank’s offer to waive LMI with just a 10 per cent deposit.
“There’s heaps of demand,” he said.
On top of that, another federal government demand-side program is about to add more fuel to the fire.
“I’m having a lot of conversations about the Help to Buy scheme,” Linton told Yahoo Finance, saying he’s got a “growing list of families” hoping to take advantage of the new program.
That federal government scheme, dubbed Help to Buy, will open to applicants from Friday, December 5.
The scheme will mean the federal government will purchase as much as 40 per cent of the property with eligible first home buyers who only need to save a 2 per cent deposit.
The shared equity program means the Australian government (the taxpayer) will participate in any capital gains or losses when the property sells, proportionate to the government’s level of ownership.
Similar programs have been rolled out overseas and at a state level in Australia. While the policy has proved controversial among market commentators, the government says it will allow 40,000 low to middle income Aussies to get into the property market much sooner.
There will be 10,000 places every year for four years.
Many first home buyers are often surprised at all the added expenses when buying property. There’s plenty to organise in terms of solicitors, conveyancers, valuers, pest reports and, of course, getting your financing approved by the bank.
Linton runs a reddit page where Australians interested in getting into the housing market can anonymously ask a mortgage broker about the process.
With the surging demand at the moment and the impending shutdown, it can be hard to push a deal through quickly, he warned.
“If you’re buying now, try to avoid a standard 30-day or 42-day settlement. Anything set to settle after about 19 December and before 12–15 January can be more stressful,” he wrote.
“You can hit delays, unanswered emails, long valuation wait times, or just complete radio silence because of staff shortages.”
NSW mortgage broker Nathan Linton expects the Help to Buy scheme to boost mortgage applicants. (Source: AAP/Nathan Linton)
Speaking to Yahoo Finance, he said pre-approval times had already been blowing out due to the large volume of applicants.
“Westpac is now at almost three to four weeks for pre approvals, Newcastle Permanent is about a month,” he said, also noting lenders like Beyond Bank had actually paused new mortgage applicants through its broker channels due to surging demand this month.
It echoes what brokers in Melbourne and Sydney have been telling Yahoo Finance about lengthier pre-approval times in recent weeks, with some banks turning to automatic assessments to cope.
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.