Home Loan Approved – Do’s and Don’ts
With so many regulatory change over the past 12 months or so, we are often asked the question by loan applicants “Why do they need to know that?’”
So, being the beginning of the new FY, we should start with some basic ‘do’s and don’ts’ about what lenders expect from potential borrowers and the areas they will hone in on when it comes to home loan applications to help you better understand today’s home loan lending space.
You need to have a basic, stable source of income, (a job of sorts helps). If your sole form of income is Centrelink payments, this is not going to be sufficient
You need to have clear credit history – e.g. if you no longer share a rental property and moved out of the tenancy 9 months ago, leaving the bills to others to take care of, the provider will lodge a default against you and your credit file if those bills were in your name and remain unpaid, and this may well prevent you getting a home loan – so pay your bills, on time, this includes your credit cards, over limits are a big no no!
You need to have savings – this generally needs to be demonstrated over at least a 3-month period and shows consistency. Having someone place a large sum of money into your bank account in February and then don’t add to it in March and April, then that is not showing consistency. You need to be able to show the anticipated new lender you are in control of your money and you are adding to your savings on a regular basis – get into the habit of saving something every pay cycle!
You also need up to date Photo ID that verifies who you are and your current address – a scratchy photocopy of your expired driver licence isn’t sufficient; we need to see the real deal!
The Tricky Stuff:
Following the Royal Commission, we just had to have last year……lenders are now reviewing your spending habits via your bank statements and transactions to help verify your monthly living expenses. Regular transactions with the word Uber could work against you, as will eBay, PayPal and After Pay. The worst thing you can ever do is withdraw cash from an ATM that is close to a gambling venue on a regular basis! If you owe the ATO money (HECS etc), declare it because it will come up on your credit report, if you have been late with paying your credit card or have more than one, tell your broker - again this will show up on your credit file. These items are all considered ongoing financial commitments, even if you have zero balances, the lenders will take the overall limit as ongoing liabilities and cost this against your expenses accordingly. Contrary to what many people think, it’s the stuff you don’t tell us that affects the application the most; lenders will often ask the question ‘what else are they not telling us?’
Please feel free to give me a call on 0438 041 111 to organise a confidential discussion about your home loan position and how we may be able to help.
As always, enjoy life, work hard, play safe and remember that we are always here to help you
‘Take the Confusion Out of Lending’
All the Best
Peter Vinci - 0438 041 111