Over the past year or so a lot of Victorians have undergone a number of financial challenges due to the impact of the coronavirus, often through a reduction or complete loss of employment, or the additional cost of a change in living arrangements. So it is no surprise that quite a few buyers are saying that the process of getting a home loan approved has become more difficult recently.
With this mind, we thought it might be a good time to provide you with some tips on some of the factors that can play a key role in your home loan being declined or approved. They include:
Property concerns. Just because you are in love with your new home doesn’t mean every bank will be. If the lender has concerns about the area, or the fact that your property is unusual, it may impact on the valuation or their willingness to lend at all.
Employment concerns. If you have been in your current job for less than a year, have changed jobs a few times in recent years, or have been self employed for less than two years, most lenders may be reluctant to approve your home loan.
Income concerns. If your current income is deemed too close to the lending limits, particularly if your income varies from time to time, you may have issues finding a bank that will approve your loan.
Lower deposit. It wasn’t that long ago that borrowing more than 90% of the property value was quite common. Many banks are less likely to approve a loan on these terms now.
Credit history. Your lender will go through your past history far more extensively than they used to. Things like betting transactions, regular charges at restaurants or Uber eats, or other discretionary spending will all be taken into consideration. Of course, if you have had previous issues with a loan, that can be an issue…and YES, they will find out, and don’t forget that the credit limit on any cards will be viewed as a liability, even if the current balance is zero.
The most important factor in addressing each of these potential hurdles is to have an experienced and objective mortgage broker working with you on your home loan application. A smart broker will know which lenders are best suited to your specific circumstances as well as knowing which loan product will best suit your specific priorities and plans. You might be surprised how much money, time and stress they can save you.
Similarly, if you are planning on making a move, the team at Ian Reid can assist you with specialist Advocates who can make a real difference to your sale or purchase.
Why not give us a call on 9430 0000 today to talk about your options? You’ll also find plenty of helpful suggestions for property sellers in our free booklet, “Fatal Real Estate Traps Exposed”.