Focus on these points to prepare for a loan application :-
If you are dealing solely with a bank you will be restricted to that bank’s products. Engaging a licensed finance/mortgage broker can expand your options and eliminate making your own enquiries, which may potentially affect your credit score.
2. Loan Type
Carefully consider the type of loan required. With an Interest-Only Loan your repayments will be assessed on the remaining loan term after the Interest-Only period. Consider splitting the loan into a Fixed and Variable combination.
3. Income/ Financial Data
Lenders now require the latest tax returns with assessment notices. If you are self-employed you must complete the most recent tax return. Financials over 18 months old are considered out-of-date.
Monthly loan repayments are now tightened. Ensure that monthly loan payments can be met at the “assessment rate”. Additionally, make sure that your household spending is realistic, especially if there are discretionary expenses. Remember that lenders have calculators that guide them to assess household expenses.
5. Savings pattern
If you have a solid savings pattern, this would certainly be favourable as it indicates your ability to save and maintain personal expenditure.
Recently we have seen lenders scaling back on Off-The-Plan (OTP) purchases and reducing the size of apartments. With OTP, when the time comes to formalize valuation, it is lower than the original price. Borrowers then need to essentially find more funds to complete the sale or opt out of the purchase altogether. Engage an experienced conveyancer or solicitor to ensure that should problems arise you have a way out. Set a limit and stick to it when purchasing at auction. Consider the services of a Property Advocate. Engage a highly qualified conveyancer to vet contracts before purchasing.
7. Credit Score
This is a vital criteria for any lender.
Avoid applying for loans directly or indirectly. The more times you apply, the more it affects your credit score and lenders factor this into their assessment. A professional broker will be able to give advice and services to mitigate this.
8. Exit Strategy
Mature applicants (over 45) are now required to provide a clear exit strategy for their lending proposal. Loan is to be repaid by retirement and funds in superannuation are not generally accepted as a form of loan clearance.
To find out more about how to achieve a favourable result with your loan application talk to Paul today.
Tags: personal finance