Improve your chance of a home loan approval!
This article outlines tips on how to get your “financial house” in order before making an application to a lender for a home loan. Since 2010 lender policy has been heavily influenced by financial regulation and laws aimed at verifying capacity to service current and future commitments. Following recent policy changes, many lenders are now taking a more detailed look into applicant’s financial situation including conduct of transaction accounts, type of expenditure, over limit fees and undeclared commitments. The list below provides tips on how to make sure your situation is presented in the best possible light, allowing you to move from rent to buy.
Review your finances – do a budget!
– Do you really need several credit cards or high limits? Unused limits reduce borrowing capacity. Unpaid balances are expensive.
– How are your transaction accounts conducted – are there overdrawn account fees, dishonour fees. Do a budget and organise your expenses.
– Are you still being charged for commitments that have finished, forgotten or you do not need anymore?
– What type of expenditure is detailed on your statements?
e.g. numerous, regular liquor and gambling transactions, while not illegal, may influence a credit officer to decline an application or increase your living expenses used to assess the application.
Check your credit file
– We encourage all of our clients to obtain a FREE credit check prior to applying for finance. This will ensure any notation can be discussed or resolved upfront and allows to the lender to be notified with an explanation. It is also a good way to check if your identity has been stolen. Identify theft can create a poor credit history that takes time to remove.
– Individuals are able obtain one free credit report each year Ask us how!
Boost your credit rating
– Pay your bills on time!
– Limit the number of credit applications if shopping around
Know and maintain an accurate record of your key details
1. What is your status of current and past employment?
2. How long have you been with your current employer? When did you start, you need to show 3 years?
3.Is there a probation period?
4. Do you receive overtime or allowances as part of your employment?
5. How long have you been residing at your current address or previous address/s? What are the dates, you need to show 3 years?
6. Are you renting, living with family or boarding?
7. If you are renting, have you maintained a consistent rental payment history?
The above questions are a reference point for you to consider when commencing the journey of moving from rent to buying your first home. If you have experienced difficulty with meeting your commitments and this is reflected on your credit file, all is not lost! There are lenders that have flexible policies that can assist. Similarly, there are lenders that are savvy with self employed applicants.
We can help you:
> Prepare a budget
> Set up a savings plan
> Help you get your financial house in order
> Review your situation and locate a suitable lender
Contact us today for an obligation free conversation.