Tips for home transitioning on the Surf Coast

November 26, 2020 BY

The COVID lockdown has prompted all sorts of property movements from upgrades with adequate home office spaces, to downsizing Melbourne mortgages and everything in between.
Each of them come with a range of timing issues, but here are some lesser known tips that you’ll need to know when a lender is involved.
1. Fixed Rate Mortgages incur Break Costs, regardless of the reason
Despite some misconceptions, mainly due to different rules overseas, break fees are break fees, and will be triggered whether it is due to a loan change, or a payout of the loan.
2. The New Mortgage is Assessed on Point in Time data
Regardless of the size of the current mortgage that is being comfortably serviced, a lender will assess current income based on the rules of the day. This includes minimum 2 years’ consistent history for self-employed, and the complexities that come with disrupted incomes during COVID-19.
3. Bridging Finance can help to manage the transition
Bridging Finance can help to avoid two moves and rental costs. Typically you’ll have 12 months to sell, but the lender will factor the risk of having to sell the property for less than its true value. However, the affordability of the loan is calculated on an “end debt” position. Where the end debt will be $0, there is no assessment of income.
4. Long Settlements can help to avoid Bridging Finance
The best case scenario for a purchase that is dependent on another property sale is a long settlement. Then, if required, a Bridging Loan can assist to only manage the time between a purchase settlement, and the funds being available from the sale of the current home.
5. The Current Home may be able to become an Investment Property
A popular option is to purchase a new home, and assume that if the current home doesn’t sell for an appropriate price in time, then it becomes a rental property. The benefit is that the lenders will factor the future rent of the former home in determining loan affordability.
However, unless income is particularly strong, this strategy can prove to be more difficult than first thought.
Contact Lanie Conquest or Nicola Tucker at Surf Coast Finance on 03 5264 7702, or email [email protected]
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