WITH SURF COAST FINANCE
The biggest question most potential buyers have as they prepare to buy is how low will property prices drop.
Although the economic fallout of COVID-19 will be felt across many employment and property sectors for years to come, the Surf Coast is less likely to feel the property downturn pinch. Protected by high health and government employment, and a lifestyle destination more people than ever will consider accessible, markets are expected to hold reasonably well.
So amid bracing for future outbreaks and navigating a whole new “normal”, buyers are preparing themselves.
The deposit is the first step, and sometimes this involves releasing equity from an existing property. It’s important to get the wheels in motion early to allow time for funds to be released, especially if a refinance is involved. With home loan rates as low as 2.09 per cent, reviewing current loans is critical to getting the structure right.
Next is borrowing capacity – that is, how much with the bank lend? This depends on the stability of income, particularly off the back of the economic shock and what is still left to play out for businesses. Length of employment, consistency of profits, ongoing tenancy, likelihood of future dividends, continuity of government allowances are all factors lending assessors look at closely, as well as realistic expenditure.
The trick to watch is where multiple properties are involved, as well as other liabilities such as car loans, as the lender needs to see that all loans can be paid out on a Principal and Interest basis, even if there is intent to sell down at a future date. They are obviously cracking down on tenancy stability and the hidden costs of upkeep. It’s at this point that the options and maths can get a little complex.
In terms of lender appetite in a post COVID-19 world, it’s no secret that banks are predicting high levels of unemployment and bracing themselves for record levels of mortgage default. So banks are absolutely risk averse at the moment. However, equally, they are hungry for good quality loan applications that make sense. So where financials remain strong, it’s a great time to lock in great rates, for a well-priced purchase.
For more tips and advice, contact Lanie Conquest or Nicola Tucker at Surf Coast Finance.
With more than 40 years combined banking and financial services experience, they help local families and businesses make smart financing decisions.