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Property Buyers Turning To Mortgage Brokers

Property buyers are increasingly
turning to mortgage brokers

marketing graph showing the increased popularity of mortgage brokers with property purchasersExcuse the humble brag, but property buyers are turning to mortgage brokers in record numbers. Here’s why that’s great news for the both of us.

Ok, ok, sure, we know we’re beating our own drum a little here.

But there’s a good reason why, we promise.

Firstly, it’s fantastic to see that at a time when the royal commission is dominating headlines and consumer confidence in the big banks is tanking, our industry is proving worthy of people’s trust.

During the September 2018 quarter, mortgage brokers settled an unprecedented 59.1% of all residential home loans.

That’s up from 53.6% in 2016 and 55.7 per cent in 2017 over the same period.

MFAA CEO Mike Felton points out that the result reflects not only the trust and confidence customers have in their mortgage broker, but the systemic importance of the mortgage broking industry.

“As banks have persisted in making it more difficult to secure a loan, turning many would-be borrowers away, consumers have continued to increasingly utilise the broker channel for experience, expertise and greater market choice to secure access to credit,” Mr Felton says.

Take that, banks

The figures emerge as the big banks continually try to curb the effectiveness of mortgage brokers. And it doesn’t take Einstein to figure out why: mortgage brokers promote a more competitive lending market at their expense.

According to Deloitte Access Economics, over the past three decades brokers have contributed to the fall in net interest margin for banks of over 3% points. This saves you $300,000 on a $500,000 30-year home loan (based on an interest rate fall from 7% to 4% pa).

Furthermore, on average, mortgage brokers have 34 lenders on their panel, and 28% of the time arrange residential loans through lenders other than the big four banks.

“In addition to providing customers access to a panel of 34 lenders on average, brokers are ideally positioned to help customers, especially those with more complex lending scenarios, to understand the ever-evolving application process and provide the information necessary to meet changing lender requirements,” adds Mr Felton.

Current model under threat

There’s been a recent push by at least one of the big four banks to make the customers pay for the services of a mortgage broker. If they had their way, that would be an industry-wide standard.

However, news that more and more customers are flocking to mortgage brokers under the current system will hopefully help us both out in the long run.

Better yet, a recent report shows that 9 out of 10 customers are satisfied with the services provided by mortgage brokers, so we sincerely thank you for your support.

Got a minute help us out a little more?

Besides continuing to use our services, and recommending us to family and friends, another way you can support us is by contacting your local MP to let them know you’re happy with the mortgage broking service we’re currently providing.

By letting your local Federal Member of Parliament know this you can help prevent the cost of our future services being transferred from the bank over to you – and you’ll also be showing your support for us.

If you’d like any more information on this issue don’t hesitate to get in touch. We’d love to speak to you more about it.

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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Bank Wanted Mortgage Broking Fees Transferred to Customers

mortgage broker sydney - demonstrators holding up placards saying; I wish this was fake newsA big four bank almost overhauled its broker remuneration model so that the cost of mortgage broking services would be transferred to the customer, the royal commission heard. Here’s how to prevent that from happening.

The Royal Commission recently revealed that back in 2017 the Commonwealth Bank planned to replace commissions paid to mortgage brokers with a flat fee, but baulked at the last minute.

CBA’s CEO Matt Comyn told the royal commission that CBA believed the most attractive model was one where “customers would pay a broker”.

The move would have saved CBA $197 million over five years if everyone in the market moved with them.

However, without regulator intervention to drive an industry wide move to this model, CBA feared they’d be left hung out to dry by the other big three banks.

“We came to a view that nobody will follow and we will suffer material degradation in volume,” Comyn said.

Not only would this model be a major disadvantage to consumers going forward, it would reduce a new broker’s revenue on an average loan to about a third of what it currently is.

Basically, the only real winner would have been the big banks.

Not the customers. Not the mortgage brokers.

The banks.

Some interesting stats

Here are some interesting statistics from Deloitte Access Economics that may explain why CBA was looking to limit the growth in the mortgage broking market:

– Over the past three decades brokers have contributed to the fall in net interest margin for banks of over 3% points. This saves you $300,000 on a $500,000 30-year home loan (based on an interest rate fall from 7% to 4% pa).

– 27.9% of residential loans are arranged through lenders other than the big four banks and their affiliates, providing competition and more choice for consumers.

– On average, mortgage brokers have 34 lenders on their panel and use 10. It’s this additional choice that adds competition in the market. The only winners from less competition are the big banks.

– 56% of residential loans were settled by mortgage brokers in the September quarter in 2017. This is up from 44% since 2012.

– 70% of a broker’s business comes directly or indirectly from existing customers, demonstrating high levels of customer satisfaction.

– 9 out of 10 customers are satisfied with the services provided by mortgage brokers.

It’s still a live issue

Basically, the only reason CBA didn’t pull the trigger on the move was because it was worried that if it did, the other lenders wouldn’t join them. Instead, they’d swoop in and steal their business.

However, if the regulator enforced a flat fee model, then all the lenders would have to get onboard.

That’s exactly what could happen if it becomes a royal commission recommendation, which is a possibility considering the extensive line of questioning from the royal commission’s counsel assisting, Rowena Orr.

How can you help?

The best way is to contact your local MP to let them know you’re happy with the mortgage broking service we’re currently providing.

By letting your local Federal Member of Parliament know this you can help prevent the cost of our future services being transferred from the bank over to you – and you’ll also be showing your support for us.

Additionally, head over to the The Adviser and Momentum Intelligence survey to share your experience with us. It’s anonymous and only takes two minutes to complete.

If you’d like any more information on this issue don’t hesitate to get in touch. We’d love to speak to you more about it.

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Stress tested your home loan recently?

 Don’t stress

Best Mortgage Brokers - showing the back of a lime green school bus that has the hash tag message written on it - never stressSeven in 10 Australian mortgage holders have not stress tested their home loan. But don’t stress, it’s much easier to do than you think.

Deloitte Access Economics’ latest report makes for pretty interesting reading.

It turns out the average Australian has a “wide-ranging hesitancy to make any sort of change” when it comes to their mortgages and other financial products.

“Why is it that educated consumers who know they’re not getting the best deal on many of their household products are so unwilling to take action to improve their household finances?” asks a surprised Deloitte.

Interesting mortgage stats

It turns out that 41% of Australians with a mortgage don’t check for interest rate changes because they either have no interest, don’t know what the RBA cash rate is, or do not see its relevance.

Even more interesting is that 68% of people say they have never stress tested their home loan.

“This is a particular worry,” says Deloitte.

“Recent estimates show that a 0.5% increase from current interest rates would cause mortgage stress to jump from one in four mortgaged households to one in three.”

Worse still, a 2% increase would throw half of all mortgaged households into stress.

Now, that might sound like a big increase, but don’t forget that it wasn’t so long ago that interest rates were at that level. In fact, it was only six years ago in June 2012.

So how do you stress test a home loan?

Simple.

Calculate how much extra a 0.5%, 1% and 2% increase on your mortgage would cost you each month and whether your budget can allow for it.

If you’d run into trouble, give us a call and we can work through some risk mitigation options with you, which could include locking in a home loan rate.

Why don’t people care about getting a better deal?

Interestingly, 1 in 3 people know there are better deals out there, while 1 in 5 don’t bother to check for a better deal.

It turns out there are three key reasons people don’t change to a home loan that would see them better off financially, with the first being decision making paralysis.

“Too often, many consumers get stuck before making a choice – and then they do nothing,” explains Deloitte.

Another big reason is people “hate feeling dumb”.

“Consumers also hesitate when they fear or worry about the possibility of making a bad decision. This, coupled with the fact that people tend to avoid what makes them nervous,” adds Deloitte.

The final key reason is that people simply put it off.

“Outcomes set in the distant future typically lack a sense of urgency in contrast with everyday needs, making it easy to defer decision making to a tomorrow that never arrives,” says Deloitte.

How can you overcome these barriers?

Well, here’s the good news. We can help you overcome all three.

For decision making paralysis we can come up with a shortlist of options, reducing the choices you need to make.

Worried about feeling dumb? I bet you we’d feel pretty dumb if we did your job for a day too. But we make it our business to help educate you and bring you up to speed in this market.

And how can you overcome avoidance? Simple. Give us a quick call today and we’ll get the ball rolling for you. You’ll be surprised how little time and effort it takes.

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How much does it cost to own a pet?

mortgage broker sydney - Chinese Shar-Pei dog playing in long grassWe thought we’d have a little fun this week and look at how much it costs the average Aussie family to own a pet. After all, two in three households have one and very few budget for them!

Let’s be honest, owning a pet goes hand-in-hand with the great Australian dream of property ownership.

So let’s be clear here: we’re definitely not making a case against pet ownership. However as Christmas time usually coincides with a spike in pet purchases, it’s a good time to look at the monthly cost factor.

Because if you’ve decided to take on the responsibility of welcoming a pet into your household, then it’s something you oughta plan for and do right!

First, how many of us own pets?

Believe it or not, but two in three Australian households own a pet.

Yet how many of them do you think run a proper budget for it? Probably very few.

And when you consider that more than $12 billion is spent on pet products and services every year, that’s a lot of unallocated money!

So if you’re looking to get a pet for your family, here’s the most common options available, listed from most expensive to cheapest.

Dog

If you’re looking at adding a puppy or rescue dog to your very own wolf-pack as 38% of Australia households have already done, expect to pay about $1475 per year.

Basically, you’re looking at an average of $123 a month for food, vet care, health products, grooming and boarding.

To avoid any vet bill blow outs, it might also be worth considering pet insurance, which will cost an extra $293 per year. Or $25 per month.

And while we’re at it, here’s a fun fact: the number one thing that dogs eat that makes them sick is underwear! So be sure to keep them out of reach!

It’s also worth noting that the above figures don’t factor in upfront costs, which can range from $1000-$5000 to purchase a select breed, or $300-$500 to adopt an RSPCA dog.

Cat

If you’re more of a cat person, like 29% of Australian households, expect to pay $1,029 per year. That’s about $86 a month.

Pet insurance is slightly cheaper for cats, coming in at $20 a month, but then again – cats probably aren’t underwear connoisseurs!

It costs between $100 and $300 to adopt a cat from the RSPCA – depending on their age – while a select breed will cost you between $1,000 and $2,500, and sometimes even more.

Bird and fish

If you’re looking to ease yourself into pet ownership, welcoming a bird or fish into the fold is a much cheaper option.

It costs just $115 per year on average to own a bird, while fish are even cheaper at $50 per year.

Final word

As you can see, purchasing a pet is unlikely to cost you an arm or a leg (so long as they have adequate play toys!).

However, you can minimise the impact it has on your bottom line by including the monthly amount in your family budget, and protecting against vet cost blow-outs with pet insurance.

If you’d like to know more about budgeting, get in touch. We’d be happy to help out.

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6 Christmas Tips to Help You Save this Silly Season

mortgage brokersydney -lady with facial and head christmas attire holding a sandwich plate and a milky drink glassMost of us roll our eyes when we start seeing shopping centres spruik Christmas merchandise in November. While it’s important not to get caught up in the festivities too early, now’s actually a great time to start prepping to ensure your budget doesn’t blow out over the silly season.

The best bit? By following some of the below tips, you can turn the retailers’ early mind games against them and save money instead!

1. Buy food ahead of time

Christmas time tends to lead to a lot of socialising. Even if you aren’t the one catering, requests to bring a plate can add up over time.

Make a point of keeping an eye out for food and drinks specials ahead of time and buy items like boxes of chocolates, long life snacks and drinks when they are on special. That will make it much easier to stretch the food budget over Christmas.

2. Opt for Secret Santas

For people who have a large family or friendship circle, Christmas can lead to a long list of presents to buy. Many people prefer not to get extra clutter for their kids, so suggest a Secret Santa arrangement instead of buying for every person.

This way you can put more thought into each gift as well as not creating more stress.

3. Homemade wrapping paper

If the end of term results in your kids bringing home sheets of artwork, why not recycle these and use them for wrapping paper for the extended family?

Not only does this mean that the kids get to see their artwork being passed on to loved ones, but it also saves you money on buying wrapping paper that will be in the bin by Christmas morning.

4. Shift the focus

Rather than dwelling on social media posts of the perfect Christmas morning with matching pyjamas, shift your focus to the true meaning of Christmas: helping others who are less fortunate.

For instance, instead of getting new books for Christmas Eve story time you could choose books from the library and make a donation to charity that helps literacy in at-need communities.

5. Keep a track of your spending

With a large percentage of Australians overspending at Christmas (and feeling guilty about it), it’s important to keep a budget for Christmas and any associated events – like holidays – over that time.

By following a budget, and starting now, you can spread out your spending – $200 a week over five weeks is much better than $1000 in the week before Christmas.

6. A final few tips

– Create a list of who you need to buy for and brainstorm present ideas before you go shopping.

– Make your own gifts.

– Buy online when sales specials are on. This can help you avoid pressure from sales staff and impulse purchases.

– If hosting a Christmas day event, organise it early so attendees can help out with the food and drinks.

Want some extra help?

If you’re struggling with your budget and don’t know how you’re going to make the money stretch over Christmas, give us a call.

We’d love to help you come up with some strategies to ensure that you and your family get to make the most of the silly season ahead.

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Keen to Jump into a Property Hotspot?

On the up and up. Keen to jump
into a property hotspot?

master broker sydney - looking down on a pair of feet in sand shoes parachuting down to earthWith housing values falling across half of Australia’s capital cities over the past year – and the media well and truly letting us know all about it – it can be all too easy to forget many regions are doing well. Here’s where property prices have recently experienced healthy growth.

The good news is that almost half of Australia’s 88 sub-regions have experienced growth in housing values over the past twelve months, according to CoreLogic.

These sub-regions are more formally known as SA4 sub-regions, which have populations between 100,000 and 500,000 people.

“Half of these regions have recorded a higher rate of annual capital gain relative to their five year average rate of growth, suggesting some acceleration in market conditions,” says CoreLogic’s Tim Lawless.

“In fact, 35% of the SA4 sub-regions have recorded an improvement in their rate of capital gain over the past 12 months relative to their five year average rate of growth.”

So where’s hot?

Two words: regional areas.

In fact, 57% of all regional areas recorded a rise in dwelling values over the past twelve months, while only 39% of the capital city sub-regions recorded an increase.

Here’s a list of the top 10 healthiest growth markets, all of which outperformed their five-year average.

1. Geelong, Victoria, 11.8% growth

2. Hobart, Tasmania, 10.7% growth

3. South East, Tasmania, 9.9% growth

4. Launceston and North East, Tasmania, 9.3% growth

5. Ballarat, Victoria, 7.1% growth

6. Central West, NSW, 6.1% growth

7. Sunshine Coast, Queensland, 6.0% growth

8. South Australia Outback, SA, 5.8% growth

9. Latrobe – Gippsland, Victoria, 5.3% growth

10. Northern Territory Outback, NT, 5.3% growth

Why are regional markets healthier?

The ‘healthier’ conditions across regional markets can be attributed to a range of factors, says Lawless, including:

More sustainable growth conditions: “Most regional areas have seen relatively sedate housing market conditions compared with the heroic gains across Sydney and Melbourne. The more sustainable history of price growth has kept a lid on housing affordability and made these markets attractive to migrants,” says Lawless.

The ripple effect: “A ripple of demand has been emanating from the largest capitals towards the satellite cities where housing is generally more affordable and lifestyle factors can be appealing.”

Sea change: “Many coastal and lifestyle markets have benefited from a rise in buyer demand, either from those looking for a new residence, second home or investment option.”

Bounce back: “Many of the hard hit mining regions have now levelled out and are now showing some growth.”

Capital Cities that have Experienced Growth

There are some capital cities also doing well, says Lawless.

In Brisbane, seven of the nine SA4 sub-regions have seen a rise in values over the past year.

In Adelaide, three of the four SA4 sub-regions have recorded an annual gain.

Hobart is also experiencing significant growth (10.7%), as seen by its second place spot on the list.

“While conditions are broadly slowing, especially around Sydney and Melbourne, many areas of the country are benefitting from a history of more sustainable growth rates, improving demand and reasonably strong economic conditions,” says Lawless.

Interested in Finding Out More?

If you’re a first home buyer or an investor looking to purchase property in an area that’s recently experienced growth then get in touch.

We’d love to help you source a great home loan and help make your property ownership dream become a reality.

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Are There Any No Deposit Home Loans These Days?

best mortgage broker - hand weighing cash on a scale against getting a houseShould you make application for a home loan, especially if the loan you want happens to be for more than 80% of the property’s value, with most lenders you’re going to have to show them that you already have a satisfactory amount of savings.

This reassures the lender that you have the capability to fulfill your repayment obligations once you have been confirmed for a loan.

Most lenders policies require that you have a minimum amount of 5% of the property purchase price saved as a deposit.

Although, there are lenders that will loan up to 98% and 100% of a property’s value. However, most mainstream lenders will only lend to 95%.

That is, unless you have an immediate family member who is willing to use equity in their property to guarantee the loan you want (conditions apply).

In these instances you don’t need any deposit and you can borrow up to 110% of the value of the property you want to buy. It’s called a Family Guarantee Loan.

No Deposit Home Loans and LMI

To obtain a loan with any of those lenders the borrower would need at least an 8% deposit in order to be able to capitalise the Lenders Mortgage Insurance premium that will be charged.

Any loan that exceeds 80% of a property’s value will incur a mortgage insurance fee. This is a fee that is paid by the borrower to an insurance company that insures the banks loan in case the borrower defaults on their loan.

What Constitutes Genuine Savings?

The borrowers savings in most instances will be accepted by the selected lender as an acceptable genuine 5% deposit amount if the savings account in the borrowers name shows the required savings have been in the account for 3 months or more.

Alternatively, the savings account had constantly been receiving funds over 3 months or more and now had the required deposit amount.

There are many classifications of savings however these mentioned below may or may not qualify for a home loan deposit:

  • Cash gifting program
  • an inheritance
  • casino/other gambling winnings
  • Cash coming from selling a non-investment asset
  • Incentives and government financing
  • Personal loan

Are No Deposit Home Loans Just a Myth?

That said, if the money can be shown to have been in the borrowers saving account for at least 3 months, most lenders will accept that as genuine savings.

Are there other options for acquiring a loan if I don’t have genuine savings?

The good thing is that there are still loan companies that are willing to provide you with a loan despite having no genuine savings.

These include:

  • Family guarantor loans – a family guarantor loan is where an immediate family member allows the equity in their home to be used as security to guarantee the loan. Conditions do apply. However, most lenders will allow borrowers to borrow up to 110% of the purchase price of the property they want.
  • Some lenders may also accept non-cash genuine savings – some of these include equity in another property, term deposits and shares. In certain cases, the sale of a vehicle owned by the borrower can also stand as genuine savings provided that the borrower shows proof that the vehicle was owned for at least 3 months.

There are some lenders that will allow you to take out a personal loan to obtain the required deposit.

Keep in mind though you will need to show healthy taxable earnings to be able to do that strategy.

Any liabilities you have or create will reduce your borrowing capacity for a new home loan.

  •  A stable rental history could see a loan provider forgive you to having to come up with 5% genuine savings. There are a few lenders who will waive the 5% deposit rule if documentation can be produced from a licensed property management agent showing that all rent has been paid on time and in full for the preceding 6 to 12 months.
    This will highlight your ability to make repayments on time and on an ongoing basis. Nonetheless, you will still need to drum up a deposit from somewhere.

What is the Most Effective Way to get Qualified?

If you’re keen on buying a home and you’re not sure if you will be able to qualify then contact us or a reliable experienced mortgage broker near you and they will be able to assess what you need to do.

Sometimes, all it takes is to understand the situation of the borrower and find a suitable lender with the right policies that can match the borrowers needs.

Brokers are the best bet because they develop their understanding and successful strategies through experience and constant communication with a network of lenders policies and procedures.

Each lender has specific policies and each borrower has specific needs – this is something that the best mortgage brokers understand and matching the borrower with the right lender is what they do very well, especially when it comes to no deposit home loans.

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Negotiating a settlement period

loan broker - hands shaking across a business desk

In a perfect world you select a property to buy, complete with white picket fence, and the settlement goes through on the agreed date without a hitch. But as we all know, we don’t live in a perfect world.

loan broker - hands shaking across a business deskWhen you buy or sell a property you go through a ‘settlement period’, which is the time designated for the buyer to complete payment of the contract before becoming the owner of the home.

Up until the settlement goes through the home is the property of the existing owner.

And with a large home deposit at stake, you’ll want to ensure you choose the right period length.

How much time should I give myself?

Generally, settlement periods are 30, 42, 60 or 90 days.

In NSW a 42 day settlement period is the most common, but in most other places around the country it’s 60 days.

Just because it’s common, however, doesn’t mean it’s the best fit for your situation (or the seller’s).

You see, both the buyer and the seller must agree on the settlement period.

However, you may have competing motivations, so this can be tricky.

Whatever the case, just make sure you allow yourself enough time for conveyancing, bank financing approval, organising the move, undertaking requested repairs for the buyer, and negotiating settlements for your other property interests.

Also, keep in mind that if you buy the property at an auction, there will already be a settlement date indicated in the contract.

If you can’t meet that date, chat to the selling agent before signing on the dotted line to see if another date is agreeable.

You might push for a longer settlement period if:

– If you’re the seller and you’re still looking for a property to purchase
– If you’re a buyer and you haven’t yet sold your own home
– You’re selling and the buyer has requested you repair something
– If you have an upcoming event that you want to deal with first (wedding, big overseas trip, etc)
– Someone is going guarantor on the loan or you’re purchasing through a family trust
– You’re buying off the plan, as the scheme has to be registered with the titles office
– You need to save more money as a buffer (especially if you’re upgrading or will be renovating).

You might push for a shorter settlement period when:

– You’re a seller who has already found another home
– You’re a buyer who has already sold your current home and needs to move quickly
– A holiday period or big event is coming up and you’re keen to move in beforehand
– You’d like to undertake work on the property sooner rather than later
– You need cash flow.

It’s important to get right

One-in-five property settlements in Australia are delayed by about one week so it’s important to give yourself a comfortable buffer.

While each party can request a settlement extension if a delay occurs, that doesn’t mean the other party has to agree.

This is where it gets a little tricky. Each state and territory has different laws, and every contract differs.

Queensland’s laws are probably the most stringent. For example, either the buyer or the seller can terminate the contract, sue for damages, and keep/lose their deposit if the other party is not ready to buy on time.

Other states have a little bit more leeway.

In NSW and Tasmania an extra 14 days can be given, in WA and SA buyers are given three days’ grace before penalty interest applies, and in Victoria a seller can immediately start charging a tardy buyer penalty interest.

Final word

So that’s negotiating a settlement period in a nutshell.

The best news? That’s about as much negotiating as you’ll need to do. Because when it comes to negotiating a loan with a lender, we’ve got you covered.

If you’d like to find out more about our services, get in touch, we’d love to help you out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Under The new Rules, Why Your Next Mortgage Application Will Get Declined

Lending regulations have tightened up considerably in the last few months. So much so, it’s time to examine the 11 issues that could put the kibosh on your home loan dreams and aspirations, and some solutions on how to fix them.

stamp text payday loan

Godsend or big mistake?
The fact is, despite their rising popularity and fast convenience Payday or cash loans are definitely a huge no, no if you are looking to apply for a home loan, because any prospective lenders will get the impression that you are financially stretched and are going to be a lousy risk

Slowly but surely the Nanny state grows
With record low interest rates the demand for home loans have not been this high since before the Global Financial Crisis. However, authorities are now stepping up the pressure on lenders to reign in their previous unconstrained lending practices.

This is being done under what is known as the National Consumer Credit Protection (NCCP) act, or Responsible Lending Practices. When first initiated in 2011 there wasn’t too much fanfare about the new rules and in the main, other than a few mild policy changes, it was pretty much business as usual.

That said, in the last few months things have changed dramatically and the Australian Prudential Regulatory Authority (APRA) have been bringing pressure to bear on the banks to start enforcing the new rules to the letter.

Also, along with the current Royal Commission Inquiry into banking practices, the banks themselves are trying to put on a ‘Goody, Goody Two Shoes Face’ to try and convince the Inquiry and associated authorities that their bad behaviour is a thing of the past and they have now turned over a new leaf.

They now want to know what size underwear you use
Young business woman planing, writing and reviewing her finances at city park.Anybody who has made an application for a mortgage over the past few months can tell you that things have become a lot more difficult to obtain any kind of loan now that the banks have gotten serious about the new affordability lending. They are now starting to forensically focus on borrower’s income and expenses in much finer detail. Some lenders are insisting that applicants provide them with their latest bank account and credit card statements so they can ascertain how much goes in and how much goes out on a regular basis.

In other words, they will now know how much your hair cut and dry cleaning bills are.

Many would be borrowers will have to be a whole lot more savvy nowadays if they have any chance to meet these strict new requirements before making any mortgage or personal loan applications.

Financial house cleaning is now in order
In fact, most seasoned mortgage brokers will tell you that you should put your financial house in order at least 3 months in advance of submitting any kind of application. On the other hand though, depending on your chosen lender it may necessitate you do this at least 12 months in advance.

Whether you’re looking to purchase your first home, upgrade to another, downsize, refinance or buy an investment property you’re going have to ensure that your finances are in good order if you want to give yourself any kind of hope in getting any kind of home loan application approved these days.

Here are 11 issues that could scuttle any mortgage aspirations you may have and how to rectify them.

1 RECENTLY SELF-EMPLOYED
Prior to and during the financial crisis you could get loans based on what you told the bank you earned. Yes, that’s correct; they would take your word for it. Entrepreneur, self-employed, business owner and your own boss words on road signFunnily enough they earned the nickname of ‘liar loans’. All the borrower had to do was sign a self certification document declaring what their annual earnings were. I’m sure some bank staff occasionally had a good chuckle when they saw applications from occupations like a bus driver claiming to make $180,000 a year. Nonetheless, they opened a gateway for many self-employed people to purchase their own home. However, the continuing abuse of these mortgages and the global financial crisis soon put paid to these loans.

The market conditions today, show many self employed people struggling to qualify for a home loan. All main stream lenders require that self-employed individuals have had an Australian Business Number (ABN) for at least two years, have been trading profitably for at least two years, and have at least two years financials available. A couple of lenders will accept one years tax returns, but you still must have had an ABN number for two years.

That said, most lenders will also do what’s called Low Doc loans. You still will need to have held an ABN for two years, but now the lenders will rely on your trading bank statements and/or Business Activity Statements (BAS) to calculate your income.

Beyond that there are lenders who will cater to newly self-employed people if they only have had an ABN for 1 day, 3 months, 6 months and 12 months. Of course, they view these loans as higher risk and they come with a premium when it comes to interest rates, fees and charges. Nonetheless, they aren’t the end of the world as they can be used as a means to an end. Meaning, you can have your cake now and refinance the loan to a better rate a little way down the track when you have the required documentation.

Self-certified loans previously offered a way for the self-employed to buy a home, but abuse of these mortgages – dubbed “liar loans” because they required no proof of income – brought about their demise during the financial crisis. The Financial Conduct Authority will officially ban self-cert mortgages in April when the mortgage market review rules come into place, but this has left some self-employed borrowers struggling to access finance.

Self-employed people finding it difficult to get traction in obtaining a home loan may well consider getting in touch with a well-seasoned mortgage broker

2 ANY MAJOR CHANGES IN LIFESTYLE CAN AFFECT YOUR ELIGIBILITY
Bankers like to see stability, it calms their ‘Risk Meter’ down no end (lol). Switching jobs or having another child at the time of a mortgage application can cause lenders to scrutinise your application a lot more closely. If you’re expecting another child lenders will increase your number of dependents immediately even though the baby isn’t quite in this world yet. That in turn will reduce your borrowing capacity. Lenders like to see stable residency and employments.

3 AVAILABLE CREDIT LIMITS OR NUMEROUS OUTSTANDING DEBTS
house and car with money on trap. debt trap conceptLenders get nervous with people who have a lot of existing outstanding debt. So, it’s a good idea to pay off as much debt as possible prior to applying for a mortgage. This will also increase the applicants borrowing capacity when existing liabilities are reduced. Another key point to observe is that lenders go on credit card limits and not the balances owed on them. Therefore, where feasible reduce your credit card limits as much as possible if those limits are affecting your borrowing capacity. You can even cancel then and reinstate them after your mortgage has closed/settled.

Always keep in mind, if you are able to present lenders with a well-managed personal financial profile the better they like you.

4 ARE YOU ON THE ELECTORAL ROLL
Electoral rolls are a handy tool that some lender use to confirm a potential customers identity. If you’re not there it can at times cause some confusion and cause you additional frustration when the lender starts to pursue you for additional ID documentation verification.

5 WHEN WAS THE LAST TIME YOU LOOKED AT YOUR CREDIT REPORT?
It’s important to keep an eye on your credit report, regardless of how good you think it is. Equifax (formerly Veda) will send you a free copy in 10 days or overnight for a fee. Identity theft is rife these days, so don’t let yourself in for a nasty surprise the next time you go for a loan.

6 PAYDAY LOANS ARE NOT A GOOD LOOK
Payday or fast cash loans with their outrageous rates of interest give mainstream lenders cause for concern when they come across them on a borrower’s profile. It gives them cause for thought that any individual who uses them regularly is stretched financially or may be having difficulty managing g themselves monetarily.
It gives the impression that a person cannot make it from pay check to pay check and they use them as a desperate measure to get by on a day to day basis instead of having a practical back up plan if they get themselves into a situation that needs sorting.

7 KEEPING IT AFFORDABLE: DON’T OVER REACH BY BORROWING TOO MUCH
We now have a generation of borrowers who have no idea what 7 ½ – 8% interest rates on a mortgage would be like. At this stage of the game where interest ratesBeautiful luxury home exterior at night, with three car garage, driveway, grass yard, and covered porch are at record lows it’s a great opportunity to take advantage of the situation and pay down a mortgage as fast as possible. Keep in mind mortgage rates won’t always be this low and when they do rise that you will be able to afford the higher repayment amount.
Use your mortgage as a stepping stone to eventually bypass the Jones’s. Start with a smaller property, a smaller mortgage and pay that down with your extra spare cash to create equity that you can use to step into a larger property.

8 COURT JUDGEMENTS, DEFAULTS AND BANKRUPTCY
These don’t preclude you from getting a home loan, nonetheless if you have experienced damaging financial circumstances that have ended you up carrying an impaired credit report then mainstream lenders won’t want to know you.

There are enterprises out there that are known as alternative lenders and they exist in the main to cater to people with impaired credit profiles. Should you find yourself in this situation we highly recommended you find a mortgage broker who specialises in this niche to guide you through the minefield of fees, charges and high interest rates.

Keep in mind though if you have a minor paid default under $1,000 on your record there is a possibility some main stream lenders will still consider you if you have a reasonable explanation for the default.

9 ARE YOU A CREDIT JUNKIE AND LEAVING TOO MANY FOOTPRINTS?
Cooked heroin on a spoon and a loaded syringe on a drug addicts tableEvery time a person applies for credit there is a listing of that credit request noted on the persons credit file. If the number of listings are low there isn’t too much to be concerned about, it may affect your credit score marginally.

That said, if you are frequently putting in applications for credit this and credit that, any credit assessor assessing your mortgage application is going to get a negative impression on how you can’t find what you want and how desperate you are.

Be careful when making financial inquiries over the phone or the internet as the person on the other end could be pulling your credit file without you even being aware of it.

If you’ve ever been declined or have concerns about the number of enquiries on your credit file, use a broker as they can sort through all the various lenders and loans to find the one you will possibly succeed with.

10 GAMBLING SITE PAYMENTS, OVERDRAWN ACCOUNTS AND OVER THE LIMIT CREDIT CARDS
Showing regular payments from your bank account or credit card statements will in most cases get you a swift decline notification as they are definitely a big ‘No-cartoon image of someone being weighed down by too much debtNo’ in this age of responsible lending. Even though payday or fast cash loans are fairly new to the lending world lenders still get nervous when they see them. If you show a prospective lender any loan or credit card statements that have late payments or over the limit notations showing on them you will in most instances get an automatic decline for your application.

11 OVERTIME, BONUSES, COMMISSIONS AND ALLOWANCES
These payments can become a bit sticky when it comes to include them to boost your borrowing capacity.

With bonuses, commissions and overtime most lenders want to see documentary evidence of the same for periods ranging from 12 – 24 months. If there’s any confusion or doubt about the payment amounts the lender will insist on an employer letter confirming the amounts and dates paid.
Additionally, when they do accept the amounts tendered they will shade the total amount by 20% and only allow 80% of those payments toward borrowing capacity purposes.

WHERE DO YOU GO FROM HERE?
Inquire in advance to any lender or mortgaged broker as to what documentation you will need for any given lender application. Keep in mind that any bank or credit card statements you provide are going to be examined for income deposits, outgoing expenses, late payments or over the limit balances.

Examine the above information carefully so you can prepare and present any application you are planning on making it in the best light possible.

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Picking The Best Mortgage Broker

How to make your mortgage life easier
personal loans written on a blackboardIt is really much easier to get the real dollars you’re going to need to invest in a home with the assistance of loan brokers. When you need a broker who isn’t specifically associated with a certain finance lending organization but could offer you the most beneficial remedies to your fiscal necessities, a mortgage broker will possibly be your smartest choice.

People who have unfavourable financial history could find it not so easy to request the help of financial companies, but a mortgage broker understands how to adjust to several different instances to ensure you get what you want. It is really feasible to make use of two or more agents at a time.

Sometimes it’s who you know
A mortgage finance broker does have connections in the market and can scree your own personal financial information through a number of mortgage companies without necessarily giving your identity away. By simply partaking with more than a single finance agent you can look at a wider variety of lenders and begin to zero in on the right home loan offers readily available.

In certain cases agents are doing work for a specific mortgage lender. When working together with an agent who’s also a loan provider, it is very clever to become mindful of this issue. This is simply because they’re not likely to go out of their way to advocate you to many different credit firms and rather will simply seek their own loan company.

Playing the ends against the middle
The great thing to try and do is utilize numerous agents,personal loans written on a blackboard if you’re planning to employ a mortgage broker that is also a loan provider.

Don’t sign any written agreement if you intend dealing with a few agents at any given time. If you happen to get into a binding agreement you could be compelled to take whatever special offers they have even if they aren’t the most effective they’ve found for you.

Fantastic benefits can be expected when obtaining aid from an agent. Most likely you don’t need an agent to find the very best rates on offer for mortgages should you have a good credit standing. You can accomplish that in your own if you have the time and resources, rather than pulling another group into the mortgage loan procedure.

When you’re in a tight spot
personal loans written on a blackboardIn case you have bad credit, although, an agent could probably get funds for your specific case which you didn’t know about. Their understanding of the sector permits them to look for the funds from a variety of trusted loan companies that will assist you in getting your home.

You will recognize that there are a great number of expert loan providers on the market which are not typically readily available directly to the general public that great mortgage brokers would have access to. These expert mortgage companies support and fund someone who has problems in their credit data as well as earnings range.

They’ve got a wide array of items available that serve all degrees of bad credit, from mild to heavy.

Where to look
It’s not hard to acquire mortgage agents. You can search online to locate their contact information or inquire from people you know to get referrals. Right after acquiring a broker, you could setup a scheduled appointment with them to find out some of their personal and also financial data.

They’ll have to look at your credit report so that they know exactly what financial circumstances you’re in. The great thing is that they’ll keep all this info and will likely move it to a mortgage lender if you decide to choose one they see, therefore helping you save a little time along the way.