Home buyers looking to access their superannuation to purchase property will need to wait a minimum three months before reapplying for a loan, warns Australia’s leading body of professional buyer’s agents.
Real Estate Buyers Agents Association (REBAA) president Cate Bakos said major lenders were scrutinising bank statements and, in many cases, declining the loan if there was evidence that superannuation had been accessed.
“The $10,000 early superannuation option is meant to be for managing the economic crisis and in the current climate it’s a signal to lenders that a household is in financial distress,” said Ms Bakos.
“Borrowers who think it’s a clever idea to access it and put it in the savings account for a house deposit need to think carefully. Based on Responsible Lending Guidelines, three months of ‘clean’ bank statements are now required.”
Ms Bakos said superannuation was just one of many crisis cashflow options available for Australians to weather the COVID-19 storm, but warned accessing the payment for the sake of investing carried huge risks.
Considering other COVID crisis opportunities, Ms Bakos also commented on the recent HomeBuilder initiative, a Federal Government initiative for eligible buyers.
“Chasing the new build grant isn’t necessarily a great idea for every buyer,” said Ms Bakos.
“Due to the short timeframes that the initiative is bound by, some borrowers may find themselves running out of time to claim the $25,000 benefit due to the strict rules around the entitlement.
“For those who struggle to have their building contract signed off by 31 December with a builder who is licensed to assist with the grant, they may find that they are holding a contract that sees them bound to complete the sale without the grant that propelled them to purchase in the first place.”
And for those buyers who target new off-the-plan properties, Ms Bakos warns even with the $25,000 grant, the purchase may still leave them clutching a problematic purchase if they are not prepared for some of the downsides of this type of purchase.
“Likewise, the risks around off-the-plan are still very real, particularly with valuation shortfalls and limitations to the finance approval process,” she said.
“New house and land packages also have their challenges with many investments located a greater distance from CBD. For some, this could be a factor if commute times or distance from family is a sensitive issue.”
Home loan ‘rebates’ also needed to be considered carefully with the moving costs of refinancing often soaking up any perceived savings.
“Borrowers need to ensure that they are getting a suitable loan product,” she said.
“Loans vary and missing out on a key feature (such as offset) can cost thousands in the long run.”
Ms Bakos urged homebuyers looking to invest to seek independent advice from a REBAA accredited buyer’s agent and to ensure they seek good mortgage product advice from a skilled mortgage broker or banker.