Whether you’re financing your next home, funding your investment property, refinancing or applying for your first loan, our expert mortgage brokers have decades of experience in the field. In fact, some would say, they’ve seen it all when it comes to client loan applications. Which is great news because it means they have a wealth of insider secrets to help you avoid being rejected by the banks and for getting your loan approved. Below are 7 of the best…check them out!
- Be Prepared- Have all of your documentation ready and available to avoid delays or issues with your application. If you are not sure what’s required, ask your mortgage broker and never apply for a loan if you’re not well prepared.
- Stay Put- If you know that you’re going to apply for a loan over the next 3, 6 or even 12 months do not change jobs, cut your hours, go casual or temporary, switch businesses, or suddenly start a new company. Lenders like stability and a steady track record and will request evidence of continual employment as well as business results of up to 2 years, if self-employed.
- Honesty is the Best Policy– Do not, under any circumstance, lie, fib, omit details or fail to include relevant financial information on your application. Because the banks will find out and they do not like discrepancies, surprises or deceitful applicants.
- Don’t Check Your Credit Score– Banks do their own internal credit scoring on each loan applicant and it’s a little known fact but every credit enquiry you make registers as a negative mark against your credit score. So avoid making credit enquiries as this is not viewed favourably. Instead, have your broker do this on your behalf as this will not impact your credit history.
- Your History Counts– Banks see past behaviour as a good predictor for the future and with centralised credit analysis everything counts. So maintain a good credit rating at all costs. Which means paying your loans, bills and credit cards on time, as well as not exceeding your credit limits and demonstrating proof of savings. Banks will check up to 12 months of your statements and your credit history to verify this.
- Snow White Spending– Be mindful of your spending habits and keep them clean for a minimum of 6 months prior to applying. Lenders do not like seeing questionable spending on credit or debit cards such as regular withdrawals of cash at the Casino, which could indicate a gambling issue, or constant large purchases from liquor outlets, which could demonstrate a drinking problem. Also, don’t suddenly open new credit card accounts or spend erratically.
- Different Strokes for Different Folks- Understand that not all lenders are the same. In fact, some lenders specialise in different areas of lending. This means that just because you have your own business, are self-employed or had an issue with credit in the past that you won’t be approved. Speak with your broker and explain your situation so they can recommend the most suitable lender.
If you have any questions or need help with your loan application, call us today.
“When I was in college, I wanted to be involved in things that would change the world. Now I am.” Elon Musk
I am a real fan of Spacex founder and CEO Elon Musk because this visionary entrepreneur dreams big. With his eyes fixed firmly upon the stars, his company is focussing on taking humanity to Mars. In fact he envisions a world where people may be born on Earth, yet live their lives on Mars as part of the first interplanetary human colony. Which is a pretty mind blowing goal.
However, to bring things back to Earth for a moment, you certainly don’t have to go to another planet to get a hot deal on your home loan. In fact there are just a 3 things to do to put yourself on track for securing the best possible home loan for your circumstances.
- Do Your Research – Get online, check out your real estate options, use our free mortgage calculator and look around for an experienced, professional mortgage broker. So you know what’s available in the market.
- Get in Contact – Pick up the phone or email your potential advisors. Ask questions and connect with professionals in the field. Your aim is to find someone you trust and with whom you feel most comfortable.
- Choose Your Team- Once you have found the right fit for your situation, choose your mortgage broker, and meet the team of experts which back them, to help you make your property dreams come true.
If you are looking for help with your home loan, refinancing or investing feel free to call us. We are here to help.
Are you ready to buy your own home, but don’t know what to do next?
For First Home Buyers it can seem like an eternity before you finally feel ready to purchase your own property. It’s exciting. You’ve done the hard yards, researched the market, put together a deposit, checked out a mortgage calculator and organised your financial affairs accordingly. At last you feel that all of your ducks are lined up and ready to go. But what you do next can make all the difference as to how smooth and stress free the next stage of the process will be.
This is where a simple phone call to a qualified mortgage broker can help. Because seeking professional advice and expert help along the way is the key step to getting it right the first time around with your finances and loan application. In fact an experienced mortgage broker will save you:
- Effort and Energy,
- Potentially thousands, if not tens of thousands, of dollars over the life of your loan by ensuring you get the right mortgage with the best features to suit your specific circumstances.
So if you are ready to own your own place, make sure all of your hard work and effort pays off and call us on 1300 559 229 today. Because the choice to own your first property is an important one, one which can form a solid foundation for your financial success into the future. And that’s worth getting the best professional advice available.
Until next time champions, we’re only a phone call away, Harry
Bitcoins…love them, hate them or indifferent to them, they appear to be here to stay for the time being. Plus, with Bitcoin, there are now over 1650 other cryptocurrencies in existence which have a staggering combined total market capitalization of around $369 billion USD. So however you feel about the Bitcoin phenomena, you certainly can’t ignore it. *
But why has it caused so much debate amongst financial experts?
Launched in 2009, Bitcoin is recognised as the first cryptocurrency or digital money platform of its kind and has a limit of 21 million Bitcoins ever to be made available. Created by a software developer known only by the pseudonym Satoshi Nakamoto, it is not backed by any central bank, nor regulated by any state. With its original aim being to allow anonymous, untraceable, secure financial transactions to occur across the globe outside the control of governments, business or banks.
More recently, Bitcoin has taken the financial world by storm with its meteoric rise in value in 2017. From a relative low of $1260 AUD in January 2017, Bitcoin’s value skyrocketed to approx. $18,840 by December 2017 and today sits around $10,630 AUD. With this massive rise, many unwary investors have seen Bitcoin as a get rich quick investment vehicle. Meaning some have approached their mortgage broker to gain equity from their homes, look at refinancing or considered selling in order to buy the currency.
What’s the risk?
Bitcoin is very volatile. Experiencing huge swings in its price, Bitcoin has surged by as much as 80% within a month, however it has also plummeted in value by as much as -30% to 40% within days. ** So it is seen as highly risky and speculative.
To make matters worse, investors tend to buy when Bitcoin’s price is high and sell when it is low, so there is huge potential for losses. Plus experts are predicting that the bubble could burst, with the legendary stock market guru Warren Buffet warning investors, “Stay away from it. It’s a mirage, basically.” ***
There is also the danger of this online currency to be stolen by hackers or destroyed by computer viruses. So guaranteeing the protection of Bitcoins can be difficult.
Added to this is the cryptocurrency’s reputation for being used for organised crime, money laundering and murky transactions on the dark web. So some governments are looking to regulate.
All up, this is what makes Bitcoin a very risky business to me and you don’t need a mortgage calculator to figure that one out!
Until next time, stay aware, Harry
The choice to live together, get married or re-married is a life changing one. And even though it’s easy to be swept up in the excitement of new love and the wonder of feeling we have found the one, there is a number of key questions to ask before joining forces and finances. Because being able to have open, honest discussions about your finances now is a key ingredient to building a great relationship and solid financial foundation into the future.
- Where Are You Financially? – Make time to discuss each partner’s current financial position before jumping into the next stage of your relationship. This means understanding what each brings to the table, including assets, liabilities, income, expenses, savings and ongoing responsibilities. Speak with your mortgage broker regarding structuring joint loans or refinancing existing mortgages if required.
- How Do You Handle Money? – Check out each other’s financial IQ and see where your strengths and weaknesses lie. Is one partner a saver, whilst the other is a spender, does one partner earn a high income whilst the other has built assets or passive income or perhaps one of you is better with budgets and managing money?
- What Are Your Future Goals? – Share your financial goals and expectations for the future and see where you share similar dreams or desire different outcomes. Once you’re clear on these decide upon what you wish to achieve as a team. Set joint goals and agreements on how you will reach these together. Check out our online mortgage calculator to help plan your future property goals.
- What About Children? – Discuss your thoughts around having children or, if you already have them, how you will care and provide for them into the future. It is wise to discuss expectations around when to start a family and how many you would like, who will be mainly responsible for childcare or how you’ll handle a blended family if you already have children.
- What if Someone Leaves? This can be a difficult to imagine, but it’s important to consider what will happen if your relationship ends. Talk about a fair and equitable exit strategy should you break up or divorce. You can put this in writing via a pre-nuptial agreement, especially if you are marrying for the second time.
- How Can We Protect Ourselves? Discuss life and health insurance, income protection, structuring joint property, mortgages, assets and superannuation funds so you have a plan should either of you become ill, incapacitated, unable to earn an income or retire.
- What if Someone Dies? Finally, it is important to share your wishes in the event of your death or your partner’s. This means creating or updating your Wills and considering how assets and finances will be handled for your spouse and children.
Until next time champions… ask the hard questions today to avoid heartache in the future.
As the great physicist, Sir Isaac Newton said, “What goes up, must come down.” However, when it comes to interest rates, the reverse is also true. Because we all know that Australia’s historically low rates cannot stay that way forever, and must begin to rise in the not too distant future. And even though there are mixed opinions amongst the experts on when the rate rise will occur, most agree that is only a matter of time before this happens. Which means at least one rate rise, if not more, is predicted in 2018.
7 Things to Do Before a Rate Rise
- Contact Your Mortgage Broker – Having a conversation with your broker is vital to keeping yourself informed and up to date with what’s currently available in the marketplace. Because new, improved loan products are continually being released and your broker can recommend the best product for your specific situation.
- Check Your Position – Once you understand what’s available, you can go to work and check your current financial position. Use our handy online Mortgage Calculator to run different interest rates and repayment levels to see how a rate rise could affect you.
- Consider Your Options – Ask yourself, “What would be the best scenario for my circumstances and what do I want to achieve for the future?” By being clear on the various choices available to you, you will make better decisions for the long term.
- Refinancing – Are you able to refinance your current loan or perhaps you may wish to fix your interest rate at the current low level for a period of time? Each has their potential benefits, but you must choose the best option for your situation. Ask your broker how.
- Budget, Budget, Budget- Create a budget and stick to it. This means being mindful of your money, cutting costs, spending less and living within your means. By doing so you won’t be over extended and financially stressed when rates do go up.
- Pay Your Mortgage Down – By paying your loan down faster with extra payments or by depositing lump sums, you can save money now and have your mortgage paid off years sooner. Plus when rates do rise, you’ll already be ahead of the curve with less to pay off in the future.
- Pay at the Higher Rate – Try paying off your loan as if you already had the higher interest rate on your loan. This means you’ll be paying off more each month and will be comfortable with the new amount when the rate rise occurs…because it will.
Until next time, stay prepared!
Budgets…we all know that we need them, yet many of us avoid them like the plague. In fact, most of us will do pretty much anything else but sit down and take the time required to create and manage our own budget.
But when you stop to think about it, organising and managing our finances is an essential part of life. And the paradox is that if we don’t take control and manage our money ourselves, it will be our finances, or lack of them, which dictate to us what we can or can’t do in life. So our money starts to control us! That’s not a great strategy when you are looking at purchasing your own home, refinancing or investing.
So the question has to be asked, “Why do we choose to ignore the important area of budgeting?”
From experience it seems that the answer lies in how we perceive budgets and how they work. Because, let’s face it, spending is seen as fun and sexy, whilst budgets are boring and restrictive. However, there is nothing fun and sexy about not being able to pay our bills, save for our dreams and create the life we aspire to. On the other hand, with a good budget, focus and persistence, we can achieve our financial goals and live a life we love.
So my message to you is to organise your own budget sooner rather than later…you’ll be glad you did.
For some great budgeting tips, check out my previous blog on the subject here. Alternatively, call us and speak to one of our professional mortgage brokers, we’re here to help.
When it comes to financing the purchase of your property or refinancing your current loan… the simple truth is your numbers count. So it is very important that you get to know your numbers before applying for your loan. And the best place to start with this process is by using the humble Mortgage Calculator.
Why? Because to use one of these super handy little mathematical geniuses you’ll need to get very clear on your particular set of numbers. These include the following variables:
Total Transaction Amount- This is the total dollar amount required to cover your property purchase and includes the agreed price of your property, stamp duty (if applicable) and any other associated in costs.
Deposit Amount- This is the total amount of cash funds and savings you have available to put towards your purchase.
Loan Interest Rate- This is your estimated % interest rate for the loan. Your mortgage broker will help you get the best rate possible for your circumstances.
Term of the Loan- This is the period of time over which you will repay your loan. This can range from 5 to 30 years, depending upon your situation.
Payment Period- When do you intend to make your loan repayments? Do you prefer weekly, fortnightly or monthly repayment cycles?
Repayments- This is the dollar figure of your regular minimum repayment amount and will be determined by your other numbers. Call us to calculate this for you.
Feel free to call us at Mortgage Coach and speak to one of our professional mortgage brokers to help answer your questions.
Until next time, here’s to knowing your numbers.
You should always take into consideration your personal circumstances as mortgage calculators do not take into consideration fees and service charges and any changes that may happen during the period of the loan. They should only ever be used as a guide.
As discussed in my recent article regarding Loan to Value Ratio (LVR), how much you can borrow is determined by two important factors: Your LVR and your Servicing Capacity. So this week I’m going to focus on the latter of these two. This is because when it comes to presenting a strong loan application it is not simply your income that your lender will consider. Instead it will be the all-important Servicing Capacity, or your actual ability to repay your loan, which will be key to your application’s success.
What is my Servicing Capacity?
Your Servicing Capacity is the amount of money that you can borrow based on how much you can afford to pay after all your income is allowed for, minus all of your current expenses and financial commitments. This amount is calculated by each lender via their own internal Servicing Calculator. Which means that how much you can ultimately borrow will vary greatly from lender to lender, sometimes by as much as $100,000! This is because the various financial institutions approach income and expenses (in particular) differently and each lender has their own unique formula to arrive at the Servicing Capacity figure.
To calculate your Servicing Capacity your lender will consider the following:
- Your Total Income:
This can consist of salary, wages, rental income, royalties, regular interest, Centrelink Payments, Family Benefits A & B (depending on the age of the children) etc. This income must be regular and ongoing as well as being evidenced by the appropriate documentation such as pay slips and bank statements. Examples of unallowable income can be Family Benefits paid as lump sums, a boarder renting a room or one off bonuses etc.
Some lenders (but not all) may discount or downwardly adjust income such as commissions, overtime, shift and other allowances under certain circumstances, unless it can be demonstrated that this is consistent income earned over an extended period of time.
- Your Total Expenses:
Car & Personal Loans– Lenders will require documentation showing your regular repayments on these loans, the applicable interest rates and how long the loans have before completion.
Credit Cards- Lenders will assume that all of your credit cards are maxed out or drawn to their full capacity, because in theory you can spend up to the total credit limits at any time. Therefore as well as gaining details of your current balances, they will want to know what your total credit limits are. They will then assume a minimum monthly payment of around 3% of your total combined credit card limit as an ongoing expense.
Existing Property Loans- Your lender will also want information about any repayments on other properties you may own, as well as the interest rates and how long the loans have before completion. If you have made extra payments and have re-draw capacity on the mortgages, then the limit on your loans, not the balances, is what the lenders will use to assess your repayments.
Living Expenses – In general most lenders will have automatic living expenses calculations based upon your circumstances, whether you are applying as a single, a couple, a family with children or group etc. This figure will increase for each additional dependent in a family.
Other Financial Commitments– These include items such as HECS debts, Store Loans, Hire Purchase Agreements, Furniture Rentals and Certegy Loans etc. These and any other regular expense commitments will also be taken into account to arrive at your Servicing Capacity.
- A Note On Savings
Demonstrating that you are able to save money and have a disciplined approach to doing so, has important benefits. This is because most lenders will want to see genuine savings of at least 5% of the purchase price of your property. Genuine savings is defined as regular deposits made over a period of 3 months or longer into a savings account in the name of the borrower. This can also be lump sum payments that have been put into a savings account but they must be held in the account for 3 months or longer.
An example of lump sum payments may be where parents gift the deposit, an inheritance is received or the proceeds from the sale of an asset forms part or all of the deposit etc. As a general rule, if you have an LVR of less than 85%, then genuine savings may not need to be demonstrated. Also when you have a deposit which is not genuine savings, this may not be a problem as there are specialist non-genuine savings lenders available.
From this brief rundown of the Servicing Capacity assessment process, it’s easy to see why the banks place so much emphasis on this key factor, because you must be able to show your lender that you can repay your loan. So if you are considering a property purchase, feel free to give one of our Mortgage Coaches a call to discuss your specific circumstances and potential Servicing Capacity position.
Until next time, watch those expenses,