Getting a Home Loan in a Tough Market

It is hard to miss the reports across the media which leave no doubt about the fact that the current lending market is tough. Lenders have introduced stricter criteria when it comes to assessing capacity to borrow for a home loan and that is affecting homebuyers and refinancers alike.

The good news is, even though lenders have tightened a lot of their policies there are still things you can do to maximise your chances of success.

Be careful about applying for credit. Every time you apply for a credit facility it leaves an imprint on your credit report. When you apply, the lender does a credit check, and that check gets listed. If you have too many enquires on your credit report it can negatively affect your borrowing capacity.

Pay your bills on time. Payment history on your loans and credit cards will now appear on your credit report thanks to the introduction of comprehensive credit reporting. This means lenders have a better idea of your repayment patterns. This is good news for those who pay their bills on time as their good payment history is recorded, but not so good for those serial late payers as that is also recorded.

Monitor your living expenses. Keeping a check on your living expenses is always a good idea, as is careful budgeting. This is particularly so in the current lending market. While lenders have always required declared living expenses, they are now drilling down further on your information on what you actually spend, so reckless spending could affect your borrowing capacity.

Keep debt to a minimum. Personal loans and credit cards can reduce the amount you are able to borrow. Keep this in mind if you are planning to purchase a home or refinance your current home loan. Consider it carefully before you go getting a loan to purchase a brand new car, or decide to buy that new TV on a no interest offer, as it will potentially reduce your options when it comes to a home loan.

To find out more about what your borrowing options are in the current market, contact us.