Are you mortgage ready?
You’ve fallen in love with a home or section, but are you mortgage ready? Having all your ducks in a row will help maximise your borrowing ability - and a better borrowing ability means a better financial situation for you.
Working toward home ownership can be a longer process than simply finding a property and whipping along to your local Loan Market branch to secure the finance. There are many things lenders take into account when looking at your application and, they all impact on your chances of getting approved and how favourable the terms of your mortgage will be. Ultimately, this affects not only the cost of your mortgage, but how much you can actually borrow.
Doing the groundwork now (aka mortgage conditioning) means a faster process when you do need to secure that loan, and hopefully a more favourable loan for you.
Important things to consider in mortgage conditioning:
The amount and requirements can vary from lender to lender. It pays to know the target you need to hit.
The composition of your deposit is also important, some lenders require at least 5% of proven genuine savings if you have less than a 20% deposit.
Then, there is the impact of personal loans, student loans and credit cards. There are some trade-offs here, short-term debts versus having a larger deposit to purchase your home. A mortgage adviser can help you find the happy medium and even assist with managing that short-term debt through debt consolidation.
Lenders are like landlords. They want to see a track record of responsible account conduct. Do you have an authorised overdraft? What are the impacts of going in and out of the red in your bank account?
Have you changed jobs recently? Lenders tend to be a bit more wary of lending to people who are still within 90 day trials. If you’re self-employed or contracting there are some considerations to take into account, which can impact your ability to borrow. Not to worry, your mortgage adviser can help you sort this out.
Are there any historical credit issues such as non-payment of an old phone bill when you moved or old gym contracts you have let slide?
Planning on growing your family or buying a new car to get the kids to sports on the weekend? What impact will this have on your weekly cash flow?
Residency and work visa:
There are some changes afoot here with the new government, but for now it's business as usual for non-resident buyers. Keep in mind, if you are here on a work visa and want to purchase a property banks like to see at least 12 months remaining on your visa. Depending on what stage you are at with your residency process there are also some other considerations to look at.
Like anything in life, planning is key. A Loan Market mortgage adviser will ensure you understand the rules around lending and what different lenders need to see from you. It’s our job to help present you in the best light to prospective lenders, so you achieve your goals, whether that be owning your own home, upgrading or purchasing an investment property.
It’s never too early to get prepared by coming in to see us about mortgage conditioning. The Loan Market team will get you in financial shape and ready to buy.
If you’d like to find out more, please register for one of our first home buyers seminars or download our first home buyers guide here