Posts Tagged credit report

Your Credit Score

Ok so you  have heard about this thing called your credit score but do you really understand what it is?   I have come across a helpful service that will allow you to look up your credit score with VEDA (at no cost). VEDA is the biggest credit reporting company in Australia and virtually all of the banks and lenders buy information from them (to varying degrees).

Obtaining your score on this website will only take around 1 minute. https://www.getcreditscore.com.au/

Before you get started, the credit score is just that, a bottom line score. The score does not show your detailed credit history.  We should also note that most lenders have their own scoring systems that only partially use VEDA information.

Each of the scoring categories below have implications for your future credit applications.

Mortgage Broker Sydney

 

 

If you want to discuss this or any other finance questions please call me Kim Wight Mortgage Broker Sydney on 0412167551 or email kwight@smartline.com.au

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Beginners Guide to Home Loans Myths

 

Mortgage Broker SydneyDon’t believe everything you hear about home loans. Seek the truth from a professional. This Beginners Guide to Home Loans  Myths can help understand the home loan process and clear up some of the misinformation you might hear.

I have been involved in arranging home finance for people for many years. I have worked for a major bank and finance company and as I write this guide to home loans, I have been an independent Mortgage Broker in Sydney  for 13 years. With 25 years of experience and access to information from other highly experienced brokers and bankers I still get challenged by clients who sometimes do not like what I tell them, if only they had read this guide to home loans and not believed what their other “experts”had told them !

There is a lot of “water cooler” talk out there in the market place and people, while trying to be helpful, will offer advice on borrowing money or structuring loans. Beware, quite often this advice is based on hearsay and not lender policy or principles, that’s where this guide to home loans comes in. You may have heard people say “just get a guarantor”, or, “you need a credit card to get a credit rating before you get a loan”.  Or perhaps the old favourite “I can buy a house and consolidate all my other debt into the mortgage”. While some of this information may have some relevance in some circumstances, in a lot of cases it is just plain wrong. I hope this guide to home loans will dispel some of these myths to help people looking for a home loan get onto the right track.

Guide to home loans – Myth No 1. You Have to Shop Around for the Best Deal

While I agree you need to look at many loan options BEWARE how you do it. This part of my guide to home loans will help you choose how to research a home loan that is right for you.

Nowadays with so much information on the internet many people use it to source loan information. But what I have seen happen is people can get into a trap of applying for a loan on line with out knowing they are doing it, if only they had read this guide to home loans! Mistakenly applying for a home loan can also happen sometimes if you meet with a lending manager in a Branch. With these methods sometimes before you know it your details are entered into the lenders computer system, a credit check done and you are told your loan is approved subject to you providing the supporting income and savings evidence.  While you might be please to know the lender will give you a loan you were really only shopping around and had not made a decision on the lender of your choice but now you have this application recorded against your credit rating.

Most lenders now use an online credit scoring system to assess loan applications. The human personal element has been removed. Here is a secret the banking industry doesn’t tell you. There are about numerous fields in an application that get a “Score”.  No one knows the exact number of fields, the lender can’t or won’t tell us.  If the score comes in outside the approval score your application is automatically declined. Have you seen Little Britain, “The computer says No”. If the computer says no it is very hard to get it overturned. It might be possible to have it overturned but it will delay your application at a time when time is of the essence. One of the main reasons loans are being declined with this credit scoring system is too many credit enquires over a short period of time on a client’s credit check report. From a lenders point of view they do not know that you have only been shopping around and did not actually proceeded with the loan applications that appear on your report. Their thinking is if the previous lenders would not approve a loan for you why should they take the risk and your loan is declined.

Guide to home loans – Myth No 2.    You can have a guarantor

So many times I have new clients coming to me and saying “my father will go guarantor” so I can get the loan. It just does not work that way, this part of my guide to home loans explains some of the ins and outs of having someone being your guarantor on a loan.

A guarantor can not be used to help you borrow more money than you can afford on your income alone. If their income is needed to help repay the loan the lender will require them to be a co borrower and their name will be on the loan. This in turn will restrict them from borrowing money in their own name as they now have a loan listed on their credit report. The only way a guarantor can be used is by offering an additional property or cash as security against a loan in order to save the cost of mortgage insurance.

When you are buying a property and you need a loan unless, in most instances, you have savings to cover not 20% of the purchase price plus stamp duty and legal costs you have to pay a once only mortgage insurance premium. This premium protects the lender in case you default on the loan. The premium can be thousands of dollars. Most lenders allow a guarantor in this instance.  The guarantor has to offer a property as security for the loan and the amount of the guarantee is limited to the mount required to have property offered as security covering up to 20% of property purchase and associated costs.

This form of guarantee is often referred to as a family guarantee or family pledge.

It is important to note that the guarantor in this instance is not being assessed in order to make repayments on behalf of the borrowers. Their guarantee is only being used to save the borrowers the cost of the mortgage insurance.  There usually has to be a family connection in order for this guarantee to be approved and the guarantor has to obtain independent financial and legal advice.

Should the borrower default on the loan both the borrowers and guarantor’s property could be sold to cover the amount owing to the bank.  In most cases should this happen it would be in the guarantors favour to try and arrange finance to cover this limited guarantee and have his property handed back to him. The problem arises then the guarantor does not have the borrowing capabilities to finance the amount of debt he has guaranteed.

Guide to home loans – Myth No 3.  I need to borrow money and get a credit rating before I can get a home loan.

I often hear clients say I have to borrow money on a credit card or personal loan to get a credit rating so I can get a home loan. Borrowing money on a high interest loan just to get a credit rating is just throwing good money away. There are other ways to build a great credit rating – these will now be explained in this guide to home loans.

What you really need to do to get a home loan is show a good savings history that will demonstrate to the lender that you have the income and lifestyle to commit to and repay a home loan.

When a lender is accessing you for a home loan they look for a savings history, stability of employment and your ability to repay the loan based on your income and other loan commitments. By having a credit card or personal loan the amount you can borrow is reduced.

If you have borrowed money in the past and missed payments or defaulted on the loan this will make it very difficult to be able to get a home loan.

Guide to home loans – Myth No 4. I can combine all my debts into my home loan.  

 Time and time again I have clients coming to me and they want to buy a property or refinance their current loan and also combine all their current debts into the new loan. This part of my guide to home loans will explain your options for debt consolidation.

This can only be done if you have enough equity in the property you are giving the lender as security for the loan. By equity I mean the difference in the loan amount to the value of the property. An example of this is you have a loan of $400,000 against a property worth $500,000 which means you have $100,000 equity or 80% equity.

When you are combining additional debts into your home loan this is seen as refinancing and the lender will only lend up to 90% of the value of the property held as security. Most first home buyers borrow between 90% to 95% of the value of the property so combining additional debts is not an option available to them.

 

No guide to home loans is complete without some tips for making the process of obtaining a home loan run smoothly.

Guide to home loans – Truth Number 1. Seek the Advice of an expert.

When you are looking for a home loan or even once you have one you will constantly have people giving advice on what can and can’t be done. Some advice will be correct, some will have once been right but now due to changes in lending policies will be obsolete and some advice will be just plain wrong. That’s where my guide to home loans, and more importantly personalised advice I can give you, comes in handy.

In order to ensure that you have the most up to date information you need to be speaking with the people who are involved on a daily basis with a variety of lenders and know their policies and procedures.

I have been advising people on home loans for over 25 years and have not only the knowledge and experience that comes with working in the home loan field but I also have the latest information at my fingertips due to the technology I have available to me.

My best advice to you is before you believe any of the “water cooler” talk about home loans you contact me to confirm what you have heard is true of false.

Guide to home loans – Truth Number 2. Know what is on your credit report.

Everyone should be aware of what is on their credit report. My guide to home loans will help you sort this out.

You can get a copy of your report at www.vedaadvantage.com.au.  You will wait 10 days for a free report or for about $60 dollars it can be emailed back to you in an hour. I provide these free for my clients if we think there may be a problem. So how can you shop around safely, investigate your options and not have your enquiries recorded on your credit report? The best way is by meeting with a reputable mortgage broker who is a member of the Mortgage & Finance Association of Australia.  A  member of this organization has a standard of ethic and education they must meet and you can feel confident you are dealing with a professional.

Guide to home loans – Truth Number 3. Get the best advice and information.

A mortgage broker will be able to show you various interest rates and loan products from a number of lenders. They can also discuss your personal situation and advise you on what loan product best suits your needs. Each lender has different criteria when they assess your loan application and some lenders will offer you a bigger loan than another lender. A mortgage broker can sort through all the options and you get to pick the loan that you want.  They know the policies and procedures of the lenders and can save you a lot of time and effort by talking through any loan characteristics that may or may not suite your situation.

A Mortgage Broker really is a one stop shop for your home loan needs.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

 

 

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HOW CAN I GET A HOME LOAN WHEN I AM SELF EMPLOYED ?

 

How can I get a home loan when I am self employedMany  new clients ask me  ”How can I get a home loan when I am self employed?”  

As a self employed person you may find getting a home loan difficult as you tend to be caught up in two different dilemmas.

By this I mean you and your accountant try to minimize your taxable income by claiming every possible expense within your business, but in order to borrow money you need to be able to show the lender the maximum amount of disposable income available to cover future loan repayments.

While your accountant does this fantastic job of legally minimizing your taxable income, which is what you  employ them to do, your borrowing capacity is then reduced as the lenders base their decision solely on your taxable income.

I have to tell you a hard fact of life – “you can’t have it both ways” and you need to understand the borrowing process and have a strategy to achieve your financial goals.

Plan Ahead

If you are self employed and looking to get a home loan you need to plan ahead. While the method of getting a loan is the same for both self employed and PAYG borrowers the real difference is how the lenders will assess your income.

For a PAYG borrower they only need to provide payslips for a lender to verify their income but much more is required for a self employed borrower.

Most lenders will require your last two year tax returns for both the business and your personal income. By looking at the last two year’s returns they will average the income over that two year period. This will mean that if in the first year you were showing little income or perhaps even a loss and  then if you showed good income in the second year by averaging the two year’s your income your for borrowing potential will be reduced.
Example

2014 taxable income  $25,000     2015 taxable income $60,000

Total for two years $85,000
divided by 2 = assessable income of $42,500

If you are planning on buying a home you need to speak with your accountant and tell them  and together with them and your finance broker a plan can be developed to have the maximum amount of taxable income declared to allow you to borrow the maximum amount of funds required.

Full Documentation Loans – Full Doc

By providing your tax years and financial statements when applying for a home loan while you might have paid more tax than you may have liked but you are saving $’000 long term as you will qualify for up to 95% of the purchase price of a property and also have access to any of the great discounted interest rates in the market place.

With full doc loans lenders will also allow for certain expense deductions to be added back to your income and increase your borrowing potential. These “add backs” can include depreciation, directors salaries, extra superannuation payments and one off capital expenses.

Low Documentation Loans – Low Doc

Before the GFC these loan were extremely popular with self employed clients as you could borrow up to 80 % of the property value and you did not need to provide any tax returns or financial statements. You simply made a declaration of your income and in the majority of cases you were offered discounted interest rates in line with PAYG clients.

Those days have gone!

Now if you are unable to provide tax returns you can still borrow up to 80% of the property value but you need to provide, in most cases, your BAS and trading statements to verify income. You also need to have held an ABN for a minimum of two years and be registered for GST if declaring an income above $75,000pa.

The Need for Bricks & Mortar

As a business person you may be thinking that you do not want to buy property but want to borrow for investment in your business. The fact is lenders want security for any money they lend you and they want bricks and mortar. Whether you have residential or commercial property you will be in the best position to borrow money if you have equity in real estate.

If you require a loan for business purposes some lenders will give you a loan on residential interest rates rather than commercial interest rates and over a longer term which may help with cash flow if you can offer them the security of a residential property.

Get Professional Advice

Researching all the various lenders  policies can be a minefield as some only want the latest year’s figures for a full documentation loan which may be better for you , some will accept an accountant’s letter for a 60% low documentation loan and the list goes on and on.

If you are thinking about getting a home loan I suggest you contact me and together we can navigate the various lenders rules and policies for your benefit

I have access to 25  different lenders and have the experience to advise you not only on interest rates and fees but also the various lender’s policies that might make the difference between you getting a loan or not.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney on 0412 167 551 or at kwight@smartline.com.au.

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WORST MORTGAGE ADVICE

 Worst Mortgage Advice Ever That  Made Me Scream

Mortgage Broker Sydney

A potential new client contacted me yesterday and told me she wanted to refinance and asked me to look at her loan options.  She then sent me all the paperwork required to apply for a loan.

This morning I analysed the information and sent   details of five different lenders, their interest rates, fees and product details to her and then rang to discuss.

She became very apologetic and said her friend had told her to apply at ”lots of places” which she did last week and had just got an approval from her current  bank. This bank was one of the 5 I had recommended.  It was not the lowest interest rate available to her.  She also said her friend had a mortgage broker who advised “not to put all your eggs in one basket” and apply at multiple lenders.

The advice she was given of applying at lots of banks is the worst thing anyone can do.

Every time you “apply” for finance it is recorded on your credit report. Too many enquiries flags warning signs to the lenders and can be enough for the internal lenders computer system to automatically decline your loan.

The reason you use a mortgage broker in the first place is to be able to look at all your loan options in one place. Each lender has a different criteria for working out how much you can borrow.  I, as your mortgage broker, can tell you who you qualify with, the interest rates and product details. I give you your top 5 choices based on what you want from a loan. There is no risk of applying with five lenders only to find out the five you applied for will not give you a loan.

Was I annoyed with this person for wasting my time?  Yes I was as I had started at 5.30am this morning to be able to provide service to other clients who were asking me to do things for them.

But I was really annoyed with the misinformation given by a friend who clearly does not understand the lending system could have put this person at financial risk.

To top it all off I was alarmed that a mortgage broker had given the worst advice possible to someone by saying to apply at multiple lenders.  This not only puts the client at risk but also damages my industry which I cannot tolerate.

I am very proud of my professionalism and will always have the client’s best interest at heart even if it means sometimes I cannot help if it is not right to do so..

If you want to look at your loan options with no risk please contact me Kim Wight Mortgage Broker Sydney on 0412 167 551 or email kwight@smartline.com.au.

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Mortgage Repayment Stress

Almost every time we come across someone in mortgage repayment stress we find that credit cards and personal loans are the culprits.

Our first response to this situation is to look at a consolidation home loan.

This type of loan may significantly reduce the immediate cash flow burden on a borrower.

The table below attempts to demonstrate just how much cheaper a home loan can be compared to credit cards or personal loans.

Mortgage broker Sydney Kim Wight

NOTE: The overall interest cost of a loan is usually greater when the loan term is extended. One good way to avoid a higher “life of the loan” interest cost is to make additional repayments (above the minimum) on your home loan once the debt is consolidated.

Even if you are not experiencing mortgage stress, now might be a good time to make a pre-emptive move. There are a few good reasons for this suggestion:

  1. Much of the Australian property market has experienced some level of capital growth over the last year or two. This means that many people now have enough equity to combine their personal debts into a home loan.
  1. Interest rates are at record low levels which means that our incomes can borrow more. If interest rates begin to rise again, you may not be able to have a consolidation loan approved by the lender.
  1. None of us plan to have lower income. None of us plan to lose our income. However, we all know that this is a possibility. Many of us take on income protection insurance for illness or injury but we can’t protect ourselves from business failure or the loss of a job. No income, no consolidation loan.

 The main message here is to take action when times are good…… Times are good. If you want help to organize your finance contact me Kim WIght Mortgage Broker Sydney, I am here to help you. 

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Your Credit Report – The Changes

There was a big change to Australia’s privacy legislation in 2013 and it changed the way your Credit Report looks and rates you for  future borrowing. There was a lot of controversy at the time, however, like many things these days, our attention gets diverted easily and often.

The rubber hits the road on that legislative change on the 1st of January 2015 and it impacts you.

Our credit providers will be able to view a lot more information about your credit behaviour.

Up until now, lenders could only see the following information about you;

  • Your defaults (only over 60 days in arrears),
  • Your insolvency history (ie bankrupt events), and
  • Your credit applications (although they could not see if your application was approved or declined)

 In 2015 (6 weeks) they will be able to see the above, and a lot more…..

  • The date that your credit was opened or provided (in other words, if your application was approved)
  • The type of credit that you have and what your credit limit is (in other words, if you have used up all of your credit)
  • The date that a credit account was closed, and
  • 2 years worth of month by month repayment history on each credit facility that you have.

Your repayment history will report like this (the boxes with numbers represent the days in arrears) –

My Credit rating

Most of Australia’s lenders have agreed to provide your data to the credit reporting agencies. If a lender does not report this information they do not get to see the information from the other lenders. So it is just a matter of time before every licensed credit provider jumps on board.

I am  not saying that this change is necessarily a bad thing.  I  could even see a situation where clients with good credit ratings are offered a better deal. However, we now live in a new world of big data. Keeping your credit rating clean has never been more important.

As always if you have any questions about this r maybe have had difficulty getting a home loan due to a poor credit report contact me Kim Wight, Mortgage Broker Sydney and I will be happy to answer your questions.

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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YOUR CREDIT FILE

credit fileThe 12th of March 2014 heralds several significant changes to the information that will be held on your credit file.

I recognise that this may seem like a very dry subject but it is very important for you to be across this information.

Until now, Australia’s privacy act has limited the credit reporting agencies to only providing negative information about your credit background. This includes credit defaults, bankruptcies and any credit applications that you have made. That limited level of information reporting is about to change in a significant way.

To see exactly what new information will be available on your credit background you can click the following link to a very comprehensive website:

http://creditsmart.org.au/what-has-changed#included

The main points of change are as follows:

1. Information about your monthly repayment conduct (ie paid on time) over the past two years can now be reported.

2. If you apply for credit, the decision by the credit provider can now be reported (declined or approved).

3. The current limit on all of your credit cards (and other credit facilities) can now be reported. This also means that if you get a limit increase, this can now be reported on your credit record.

4. The repayment term and repayment type on all of your credit facilities can now be reported.

5. A credit provider can now also provide an opinion that you have fraudulently attempted to get credit or fraudulently evaded your obligations to repay credit, or that you do not intend to comply with your repayment obligations.

6. Credit defaults can be lodged on any outstanding amounts over $150 if you are more than 60 days behind on your repayments.

For the majority of people, there should be great benefits associated with this new credit reporting system. The overall cost of credit fraud in Australia is quite high and this new system could go a long way toward reducing the cost of credit for all of us. Let’s hope credit providers pass on the savings….

It is also important to note that the 12th of March is only the point where the credit providers can legally start reporting this information. Most credit providers will take time to build the systems capabilities needed to take full advantage of their new found freedom.

If you (or your family or friends) are currently experiencing difficulties in relation to any credit facilities, please contact me Kim Wight Mortgae Broker Sydney . I  have a range of options that may be available to you.

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney, Uncategorized

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CREDIT CARDS ADDICTION by KIM WIGHT MORTGAGE BROKER SYDNEY

As a Mortgage Broker based in Sydney  I see a many clients with large amounts of debt on their Credit Cards and I am seeing an increasing addiction to these debt temptation devices.

A very large number of people now count credit card repayments as one of their most significant monthly expenses. And there is absolutely no doubt that I am coming across more people with significant credit card problems. It has become disturbingly normal to see couples with combined credit card debts totalling more than $20,000.

ASIC (The Federal Government Financial Regulator) have recently created the money smart website to help people take control of their personal finances. A great website. Well worth a look even if you have everything under control. One very scary part of this website is the LIVE credit card debt clock. This clock shows how quickly Australians are growing their credit card debts. Have a look for yourself by clicking the link below:

https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock

Here is a typical credit card stress problem that I was  recently able to solve :

I came across a couple with $34,000 worth of credit cards. The monthly repayment on this credit card debt was $1,020. I managed to consolidate the $34,000 worth of credit cards into the home loan and the repayments reduced by $816 to $204 per month. A huge relief. The clients were over the moon. All I can hope for now is that those debt temptation devices were destroyed.

People are usually quite private about their financial strains but if you do know of anyone that is struggling, please don’t hesitate to refer them through. If there is a solution, I will find it.

If you would like to discuss your personal situation or are looking for any home loan advice please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

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MONEY MINDSET IS CONTAGIOUS – KIM WIGHT MORTGAGE BROKER SYDNEY

Mortgage Mogage Sydney

As a Mortgage Broker in Sydney I have people coming to be looking to finance their hopes and dreams. They often say they don’t understand how some people seem to “have it all” , great home, cars holidays . My answer to them is that your money mindset is contagious. 

In our lives, we like to be around positive, happy people. We enjoy being in their company and we want to hear what they have to say. Quite simply, they make us feel good.

On the other hand, we all know people who are never happy about anything. These are the people we tend to hide from. You know the type:

  • I hate spring, it gives me hay fever.
  • No one ever gives me a chance.
  • I’m always sick and no one cares.

We avoid these people because nothing we can say or do will ever be good enough to change their view of their world. I say their world, because it is not the perception I have of my world. I love the first signs of spring. I believe life has given and continues to give me wonderful opportunities, and I have good health because I look after myself.

What I have seen over the years is that it is the people we mix with or admire that determine our money mindsets.

I have seen clients who say things like:

  • The banks make it too hard for me to borrow money.
  • How am I ever going to get ahead?
  • Banks make it too easy to get credit cards and run up debt.
  • I will never to able to buy a home.

These clients have a very negative view of the world and want to blame everyone else for the situation they find themselves in.

The problem with these people is that their money mindset is locked into a very negative space. They cannot see a way out of their situation. If you mix with these people, you may be in danger of catching their destructive money mindset.

The reality is that the lending criteria are the same for everyone. Banks lend money based on your taxable income less ongoing expenses. While you may be offered credit cards, it is your choice to use them and your responsibility to control your spending. Thousands of people on various incomes buy homes every year.

Many clients ask me about buying an investment property or paying their home loan off early because they have seen friends or family members do it and want investigate their personal situation. Others have seen people build successful businesses and want to know how they can finance their business dream.

I have first-home buyers asking for advice because all their friends are buying homes and they want to do the same.

The common thread for these people is that they mix with likeminded people and share the same financial dreams, which they believe can come true. They are positive about their financial futures.

Who we are is a result of the influences around us and how we react to them. If you want to have a happy, successful and financially comfortable life, mix with people who share your vision and work towards achieving it.

“The outer conditions of a person’s life will always be found to reflect their inner beliefs.” – James Allen.

If you would like to know more about your money mindset download your free E book Money Mindset is Contagious available through my web page.

If you have any questions about your financial situation please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

 

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Tips for first home buyers

 

Mortgage Broker SydneyBeing new to the property market many first home buyers do not know the first thing about getting a loan and how to buy a property.  Here are the top tips for first home buyers, written in terms of the top five mistakes I see first home buyers make in my role as a Mortgage Broker in Sydney.

Hopefully this will help you to make the process of buying your first home more enjoyable and much less stressful.

Kim Wight’s tips for first home buyers – don’t make these common mistakes.

Mistake No 1.  Not getting a loan pre approval. 

It is important to know how much you can borrow before you start making offers on a property.  By looking at all your home loan options and completing a loan application with a lender of your choice you will know your maximum loan amount. At the time of applying for the loan pre approval any problems that might come up such as savings history, employment issues or credit report problems can be addressed in a timely manner rather than when you are in a five day cooling off period on the contract and could lose your .25% deposit.

Mistake No 2.  Not knowing what is really important to you in a property.

You might see a property that you love the look off but is it near the services you need?  You need to make a list of what you want both the property and the area to have.  Does it need to be near public transport, schools, child minding centre, gym, cafes, church, and family?  I have seen clients buy their dream property only to sell a few months later because it did not complement their lifestyle.

Mistake No.3   Not researching the area.

Along with knowing what you want from a property you need to research the area to know not only property values but resale potential, capital growth and services available.  You also need to know of any future building or road works or proposed changes in the area.  You can do this by speaking with real estate agents, neighbours, local business owners and also get an R P data report with I can provide free to you.

Mistake No.4   Not knowing how the sales process works.

Once you have had your offer accepted on a property the process starts to move quickly. It is important that you tell your mortgage broker or lender that you have found a property so formal loan approval can be arranged.  It is usual in Sydney that when your offer has been accepted that you pay a .25% deposit of the agreed price and sign the contract. You now have 5 days to have your solicitor review the contract, pest and building reports done, lender valuation completed and loan approved.  If you delay in telling your lender  the likelihood of having your loan approved in time is greatly reduced.  Once formal approval is given you will be asked to hand over the balance of the deposit which is usually 10% of the asking price and the exchange of contracts is completed. You cannot change your mind once this is done. You are obliged to buy the property.  For this reason your solicitor will not allow you to exchange without formal loan approval in writing.

Mistake No. 5  Not setting a budget.

After you have bought the property you have not only loan repayments to be paid but council and water rates, maintenance costs, maybe strata levies. It is important that you set a budget to allow for all your living expenses. A credit card is not a budget.  Often I see first home buyers that rush out and buy new furniture on the no interest for 3 years plan or run up their credit cards decorating their home only to find that suddenly they cannot afford to repay the balances of these cards and are making high interest repayments. While we all like nice things and want our homes to look good accruing massive debt is not the answer. Most relationships breakups happen over money.  I advise people that if you can’t pay off your credit card in full in 3 months you can’t spend the money.

I hope you have found this useful.  If you would like to discuss your personal situation please contact me Kim Wight Mortgage Broker Sydney at @kwight@smartline.com.au

Posted in: Blog, First Home Buyers

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