5 common reasons home loan applications are rejected

5 common reasons home loan applications are rejected

Whether it’s unrequited love, or an unsuccessful home loan application, getting your heart broken is never easy. Here are five common reasons home loan applications are rejected.

 

Due to the banking royal commission, lenders are cracking down on home loan applications.

Applications that would have been approved in a just few days last year are now being put under the microscope for much longer periods.

To help you in your quest to secure an approval, here are five common reasons a lender may reject your loan application.

1. No proof of genuine savings

Lenders use the term ‘genuine savings’ to describe funds you’ve saved over a period of time.

Basically, if you can’t prove to them that you can knuckle down and save for a home loan, they’re going to baulk when it comes to believing that you can pay one off.

Here are seven ways to prove ‘genuine savings’.

– Regular deposits into a savings account over 6 months.

– Term deposit savings accounts held for at least 3 months.

– Shares or managed funds held for at least 3 months.

– Rental history for the past 6 months.

– Salary sacrificing through the First Home Super Saver scheme.

– Additional repayments into a car loan or personal loan.

– Deposit paid to a real estate agent, builder or developer that was originally in your savings account prior to being paid (ie. not borrowed from somewhere else).

2. You spend like a drunken sailor

Lenders not only want to see you save money. They also want you to demonstrate that you can exercise discipline when it comes to your spending habits.

Therefore lenders will trawl through your spending accounts hunting for any big-ticket items that are out of the ordinary.

This might include a $400 ATM withdrawal at a casino, or a $100 purchase at a baby store if your application says you don’t have children.

3. Your credit history ain’t so hot

Since Comprehensive Credit Reporting was introduced in July, lenders have been sharing a lot more of your credit history.

You can get a free credit report once a year from one of three national credit reporting bodies, which are listed on this government website.

If you find errors in your report, you can get them corrected. You can also take steps to improve a ‘poor’ rating by clocking up a period of consistency and reliability.

4. You don’t have a big enough deposit

Lenders like to see that you’ve saved a deposit of at least 10% to 20% before applying for a home loan.

But all too often people forget to factor in additional funds for other expenses such as stamp duty, lender’s mortgage insurance and removalist costs.

That means, for example, if you have saved $70,000 for a $700,000 loan, you might want to keep saving for a little while longer before you apply for a loan to factor in those other expenses.

5. Your employment situation

Even if you tick all of the boxes above, lenders may also reject your loan application if you haven’t been in your job long enough. And if you’re unemployed, they can’t approve it full stop.

Those who are self-employed are also running into headwinds. Lenders are becoming increasingly hesitant to approve loans unless a steady and reliable income stream can be proven. That said, there are lenders who are more flexible when it comes to self-employed workers, and we can help guide you towards them.

How we can help

We help people who are seeking a home loan overcome all of the above hurdles on a daily basis.

So if you or someone you know has recently had a home loan rejected, or you simply want to nail it the first time, get in touch.

We’d love to help you navigate the tighter lending standards to make your dream of home ownership a reality.

Don’t get outfoxed: a quick guide to property valuation

Don’t get outfoxed: a quick guide to property valuation

Information is power. Knowing the property valuation can help you secure a great price during negotiations.

Whether you’re a buyer or a seller, having an accurate property valuation conducted can give you the confidence you need to close the deal in your favour.

And it doesn’t matter if you’ve had one conducted recently. The housing market is constantly shifting.

A house worth $600,000 a year ago could be worth much more – or even less – today.

So it’s vital to always obtain reliable, up-to-date advice on the value of a home when buying or selling.

Who conducts a property valuation?

Property sellers can approach either real estate agents or private valuers for a valuation.

While private valuers are not used by banks when lending decisions are made, they are useful for a guide to the estimated market value.

In fact, “bank valuations” are altogether another thing. They’re conducted by a lender to determine their risks when you apply for a home loan. And they’ll usually be more conservative than the market valuation.

What exactly is meant by “market value”?

The market value of a property reflects the price that a willing buyer and willing seller negotiate before a transaction takes place.

It is not the current listing price of the property or the amount of money that was last offered for the property.

How property is valued

A property valuer takes a number of different things into account before coming up with a figure.

Typically, they look at the number and type of rooms, the size of the property, location, and areas for improvement.

They may also look into whether the building has a sound structure, the quality of the property’s interior design and fittings, ease of access, and planning restrictions.

Outside the property, they will look into any local council issues and compare recent sales figures in the area to understand how in-demand the property may be.

Factors that influence value

Many of the factors that decrease a property’s value are beyond the control of homeowners.

The popularity of a property’s location and surrounds will have a huge impact on its price. For example, a new whizz bang unit block may go up next door making yours look outdated, or a new high rise could block your ocean view.

Government legislation – such as changes to foreign ownership or Labor’s proposed changes to negative gearing and capital gains tax – can also impact the market.

There are, however, ways that sellers can increase the value of their home outside fluctuations in the market. We’ll take a look at a few below.

Kitchen and bathroom: These areas attract the most interest from potential home buyers. Consider allocating a chunk of your budget towards new sinks, countertops and cabinets.

Fresh paint job: Painting can make a property feel new. Neutral creams and whites suit most people’s preferences. Lighter shades also give the impression of spacious rooms.

Get trimming: If your property looks gloomy, try trimming overgrown bushes, mowing the yard, and growing flowers.

Improve energy efficiency: Buyers may dig deeper into their pockets for a home that helps them save on energy costs. Install appliances with positive energy conservation ratings. Also, replace old windows with ones that have a durable sealing.

And a quick warning to the buyers out there. Make sure you don’t allow yourself to get “wowed” by cosmetic upgrades. Remember that there are other important factors you’ll want to consider when you evaluate a property too.

Want to conduct a property valuation?

If you’d like help finding out exactly how much a property is worth, then give us a call.

We’d be more than happy to put you in touch with a reliable, independent valuer who will help give you an insight into the market value of the property you’re looking to buy or sell.

Four simple ways to increase your property’s resale value

Four simple ways to increase your property’s resale value

Everyone dreams of investing in a home or business that will fetch them more money than they originally bought it for. Here’s how to roll-up your sleeves and get started.

Making the appearance of your property desirable is critical because yours will be among a long list of properties that a potential buyer will see.

So how do you make your property stand out from the pack?

Well, by implementing a few of the below affordable steps you may not only raise the appraisal value of your property – but maybe a few eyebrows too.

1. Kitchen and bathroom upgrade

The kitchen and the bathroom attract the most scrutiny from potential home buyers and can make or break a deal.

Therefore, you should consider allocating the larger chunk of your remodelling budget to these spaces.

If your budget allows for it, consider installing new modern sinks, updating the countertops and replacing old cabinets.

2. Improve energy efficiency

Buyers will generally be willing to dig a little deeper into their pockets for a home that will help them save on energy costs in the long run.

So hire a Level 2 electrician to inspect the property and try to follow their recommendations to the letter.

You can install appliances that have positive energy conservation ratings and also replace old windows with ones that have a durable sealing. New modern doors and increased insulation can also boost energy efficiency in your home.

3. Give it a fresh coat of paint

Painting can make a property look and feel new. Who wouldn’t want to buy a home or business that’s ready for them to move in immediately?

However, go for neutral creams and whites that will suit most people’s preferences and avoid bold colours.

Remember that lighter shades like beige and white give the impression of spacious rooms.

4. Enhance curb appeal

The appeal of your property, when viewed from a distance, is important.

If it looks abandoned and gloomy, then it needs work to make sure it ready to greet its new owner.

You can make cosmetic improvements like trimming overgrown bushes, mowing the lawns, planting grass on bare areas and growing flowers.

Final tips

Property improvement should not cost you too much if you focus on the critical areas that appeal the most to buyers. It also helps to think of the above ideas as adding to your investment – not an expense.

If you’re unsure where to start, or would like some extra tips, don’t hesitate to get in touch.

We understand precisely what residential and commercial buyers look for in a home and investment property respectively, and would be more than happy to help out.

 

 

Are you flushing money down the drain by putting off refinancing?

Are you flushing money down the drain by putting off refinancing?

Every year thousands of Aussie families flush their hard earned dollars down the gurgler because they put off the simple act of refinancing their mortgage. If you’re overdue, rest assured that it’s much easier than you may think!

While there are no hard rules about refinancing, it makes financial sense to review the loan when your individual circumstances change.

For example, you may be growing your family, moving to a new location, or getting married.

There are also plenty of reasons that exist outside personal circumstances, including the major financial benefits it can offer, and we’ll run through some of these below.

Refinance to get a better rate

Refinancing does not always have to mean changing banks.

There are hundreds of circumstances in which borrowers refinance their loans to get a better rate from their bank.

The mortgage market is very competitive, and a deal signed two years ago may not be in your best interest today.

However, if your bank is not in a position to offer you a better rate, there are many lenders in the market who can get you a better deal.

Lock in a great rate

You may have seen the news recently that the RBA kept the official cash rate on hold at 1.5%, but for how long.

However it won’t stay that low forever!

In fact, half of Australia’s leading economists in Australia’s longest running survey – the BusinessDay Scope economic panel – believe the RBA will lift its cash rate by the end of the financial year.

With so many experts predicting interest rates to rise in the next 12 months, and some banks already increasing their interest rates, now could be a good time to lock in an interest rate on your home loan.

Consolidate debt

Refinancing helps to reduce the interest payable on the different loans you have, which can include credit card, car loans or personal loans.

It basically involves combining all the loans into a new mortgage, giving you one simple repayment to make each month instead of a bunch of them – which can lead to late fees if you forget one.

The best news? All your debts are charged at the home loan interest rate – which is usually much lower than a credit card rate!

Increase your investment

If you are looking at your investment options but are financially constrained, it’s time to consider refinancing your mortgage.

One reason to do so is to buy another property.

Refinancing in this circumstance makes a lot of sense because you could have enough equity in your property, which may enable you to make another house purchase.

Get in touch

If you’re feeling like it’s probably time you should refinance your home loan, but are simply too busy to do so, then we’ve got great news for you: our job is to make it super quick and easy!

In fact, we can help make the whole process so stress free you’ll be kicking yourself for not doing it earlier.

So if you can identify with any of the above reasons to refinance you home loan, feel free to get in touch with us today!

 

 

3 Questions to consider before refinancing

Who would have ever thought we would see one of the big 4 banks offering an interest rate of 3.59%.  Without a doubt their are opportunities for you to save significant money on your home loan.

Now is the time to refinance…..  Or is it….

Watch on as I discuss 3 questions you should ask yourself before refinancing your home loan.

If you would prefer to read instead of watching the video, scroll down to see a transcript.

Whenever you are ready, there are 4 ways in which I can help you right now

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Transcript

Hello, Brendan from Buyers Choice, your home financing specialist.

This week, I want to have a chat about refinancing.

Given the current climate we’re in, the number of offers out there from various lenders, a common discussion I have with various people is, is now a good time to refinance?

If you’re thinking about refinancing, I think there’s three questions that you should ask yourself before committing to refinancing your home loan.

Question 1

The first one is, has your finances changed? Have you received a pay increase? Have your expenses gone up? Your child’s moved from primary school to high school, or they’ve decided to start eating twice as much food. Have you had a new baby come into your life?

There’s various things which could have happened which changes your financial situation. As a result, it may mean it is a good time, or it could mean that it’s a poor time to refinance your home.

Question 2

The second question you should be asking yourself, will refinancing save you money?

Now, I have previously done a video on the costs which you incur when you refinance your home. It isn’t a zero-sum gain. There’s also, and I’ve mentioned this previously, the fact that if you’re over an 80% loan-to-value ratio, LMI will be involved, so Lenders Mortgage Insurance.

So between that and the cost of refinancing, it could cost you from $1000 to a couple of thousand dollars to $10,000, depending on the size of your loan and your circumstances, to refinance.

Now, if you’re, found a great new rate, and you’re saving $50 a month by refinancing your home loan, but it’s gonna cost you $1000 to refinance, is it worth it? Is it worth your time and effort, getting all the information together, putting it all together, submitting the application, going through all that, for something which is gonna take you 20 months to pay off?

No, you’re better off staying where you are. So it’s a consideration that you gotta put into mind.

Question 3

The third question you should ask yourself is, are you planning on selling your home in the near future?

And again, it’s around, if your plan is to sell, move on, upgrade, do whatever, now may not be the best time to refinance. There’s a lot of effort, you’ve gotta get all the paperwork together, you’ve gotta put the application in, you’ve gotta go through the process.

If you’re going to a new lender, you’ve gotta set up all your accounts and everything else. So as a result, if you’re considering selling your home in the near future, or your loan’s starting to get small, there’s only a small amount still to be repaid, it may not be worthwhile refinancing.

We look around and we see these great rates. Save an extra 0.25% here, fix it for three years at this new, never-before-seen and never-be-seen-again interest rate.

But unless there is a benefit to us, it’s not worth doing.

So next time when you’re thinking about refinancing, think about these three questions again.

Has your financial situation changed?

Are you going to save money by refinancing?

And are you looking at selling your place in the near future?

And if those answers don’t add up to you, just put it on hold until the next time you review your home loan.

Anyway, Brendan from Buyers Choice, great talking to you again today.

Please hit like to this video, and if you’ve got any questions, feedback, please leave a comment below.

Look forward to talking to you next time. Have a wonderful day.

How to get rid of credit card debt

How to get rid of credit card debt

How consolidating your credit card debt can save you money.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

$32,000,000,000. Yes Thirty Two Billion Dollars.  That is the credit card debt currently owed by Australians, that’s an average of around $4,300 per card holder.

With interest rates on credit cards typically running at 15% to 24% the average credit card owner would be paying $650 to $1,000 per year in interest.

This doesn’t include any fee’s and charges the credit card provider may charge.

Add in a second credit card or a personal loan or two, and it is not difficult to see why it is so easy to get yourself into financial strife with debt.

How do you get on top and manage your credit card debt?  Read on to find out…..

Top Three Tips for Managing Credit Card Debt

Your individual situation will most likely be very different to the national averages.  You may have significantly more credit card debt or you may have none.

Regardless of how much or little credit card debt you may have, the following 3 tips are worth following (at least the first two if you have no debt).

  • Have a budget – if you don’t know what your income and expenditure looks like each month, there is no way to know if you can afford that new dress, latest iPhone or that cruise you have been dying to take.
  • Set up a regular savings – savings form an important part of your household finances, allowing you to afford the bigger ticket items or pay for those unexpected expenses.
  • Consolidate your debts – This simplifies your repayments and means you only have to deal with one interest rate. Typically you will end up paying a lower amount of interest which will save you money.

Competition

How to get on top of your finances with Debt Consolidation

What exactly is “Debt Consolidation” – it means refinancing your debt onto the lowest interest rate possible – and setting up a realistic repayment plan to get it paid off!

The key here is having the plan to pay off the debt.  If you don’t budget to pay off the debt, all that will happen is that you will keep on getting further and further into debt.

So what are the 3 Main Options for Consolidating Credit Card Debt?

  • Transfer your Credit Card Debt onto another Credit Card offering Balance Transfer Rates

This can be a great option, as there are many Credit Card providers offering 0% on balance transfers for 6 or 12 months.  However, this only works if you can pay off the debt within that time period.

While you can continue to transfer the debt from card to card, this will start impacting your credit score and could impact on what lenders will give you in the future.

  • Consolidate your Credit Card Debt with a personal loan

Using a personal loan for debt consolidation has the significant benefit of the personal loan having a defined lifespan.  The repayments will have been calculated so you pay off the loan over a certain timeframe (3 to 7 years).

This will save you a significant amount of money in interest, but you may end up having to repay more each month on the personal loan than you currently paying off the credit cards.

  • Incorporate your Credit Card Debt into your Home Loan

Provided you actual have a mortgage and equity in your home that can be used for debt consolidation.

By incorporating your credit card / personal loan debt into the home loan, and increasing your home loan repayments accordingly will not only save you on interest but will allow you to pay off the home loan sooner.

Of course these strategies will only work if you stop adding to your current credit card debt.  If you cannot control your spending habits the best option is to cut up the credit card.  If you can commit to controlling your spending, then debt consolidation can save you a lot of money.

Would you like some help to save money while getting rid of unwanted credit card debt?  Don’t know where to start?  Give me a call on 07 3423 8730 or fill in the enquiry form here to set up a free and no-obligation chat to see how I can help you get rid of your unwanted debt and to save money.

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