Frequently asked COVID-19 Questions #5 | I’ve just signed a contract on a house!
So you’ve just signed a contract, and BOOM!
Brook allays some fears and puts things into perspective for people who need answers on this topic.
So, we have had a couple of clients that have signed contracts just before all of this COVID-19 stuff came in to effect.
They’ve had to shut their businesses, they’ve lost they’re income or their income has reduced as a result of it – and their house is not settled yet! So what happens in this instance, you do sign a contract and unforeseen circumstances, you do lose your income before settlement.
So a few factors will influence this, and we’ll go through them on an individual basis with each client.
How much deposit you’re putting in? What the loan to valuation ratio is will be a big thing.
Do you have excess cash in the account that you can use as a servicing buffer between now and when things and incomes return to normal?
Are you getting any income at all, or did you receive redundancy?
What does that look like, are you getting half pay?
Are you getting JobSeeker or the JobKeeper payment?
Any of those things will come into play, and what are your employment prospects down the track if you’ve lost your income altogether are you trade qualified? Are you uni degree qualified? Do you have a skillset that is quite unique that you will pickup work? Or do you do something generalised like hospitality or admin so those things could play in your strengths or weaknesses.
In addition to this, we also have had some advice (from a good solicitor that we use a lot) that she is having a pandemic clause into any new contracts that are being signed. So we’re sort of encouraging our clients that are looking to buy, and sign contracts at the moment to just talk to their solicitor before they sign anything basically.
That way they can do their job, and they can advise you on what things you should be adding in to cover off on the fact that there’s going to be delays at this point in time, and we have no idea how long. Some financiers are taking up to 30 working days just to pick a file up and asses it at the moment and that’s out of our control.
So they can put some things in to cover off on delays, they can put some things into those contracts to cover off if you do lose your income and your finance falls over at the last minute, that you won’t lose your deposit, things like that so we we’re really encouraging you to just talk to your solicitor before you sign a single thing and just explain the situation to them. Say is there anything I can put in the contract to protect me a little bit more given the uncertain times.
So to give you an example we do have a client who’ve sign a contract, had to shut his business and is able to get the Job Keeper payment. He’s able to get access to the 2x ten thousand dollar bonuses, has some cash in his account to cover him as a servicing buffer between now and settlement, and the banks are quite happy to consider this situation.
That is a high loan to valuation ratio application and that to us says that the banks are being reasonable and are willing to work with our clients to try and get that favourable outcome.