When looking to refinance a loan or obtain a new loan timing can be of great importance. Sometimes there are short settlement times or pressures from another lender for you to refinance and it is these circumstances you need to have as much information together as possible to make the process as easy as possible.
The following provide some tips on how you can minimise and avoid delays with your application:
1. Be aware of your credit rating/credit history When applying for a loan the lender will look at your credit history. You can obtain a copy of your credit report prior to the application being submitted. By doing this if there are any problems or inaccuracies they can be rectified. It also provides your broker with important information to assist you in offering you the correct lending product.
2. Be aware of your property value You should have a general idea what your property is worth. Don’t fall into the trap of over valuing your property try and be conservative when giving information initially to your broker. The reason being that most people will over value their home and this can make it a little tighter when the lenders valuation is completed.
When your application is conditionally approved the final approval is based on a professional valuation of the property. These valuations are based on the property location, size, state of repair and the prices other properties have sold for in the area in the past 180 days.
In the initial pre-application stage it will assist your broker and yourself if you can do a little research on property sales in your area in the last 180 days of similar type and land size.
This information can be obtained from real estate figures supplied by data companies and by viewing recent sales from property sales websites.
3. Make sure your finances and tax returns are up to date and easy to access Lenders will always want to see proof of income. This will be in the form of tax returns, assessment notices, payslips, group certificates/employment letters and possibly banks statements.
4. Mortgage, personal loans and credit card statement reviews Ensure the statement for any mortgages, personal loans and credit cars are readily available. Lenders will want to review your payment conduct before approving any loans. When refinancing these debts 3-6 months of statements will be generally required ensuring that the most recent statements are on hand. ment cycle is 6 monthly, it is ideal to obtain a most recent month end statement showing all transactions up to the time of your application.
Where they may have been missing or late payments on a loan or credit card the broker will require an explanation to pass on to the lender so they understand your reason for missing the payment(s) when they are assessing your application.
5. Have an understanding of transaction costs When taking out a loan there are a number costs that may be applicable. It is important you know and understand what those costs may be.
For example when purchasing a home there may be taxes such as stamp duty and/or transfer costs applicable.
Other costs may be valuation fees, insurances, legal fees and application fees all of which are generally added to the final settlement figure on payout thus effecting the loan amount required.
When working with your broker ensure they provide you with as much information as possible about these payout fees/transaction costs. transaction costs.
6. Get a document checklist After you have discussed the lender you wish to apply to with your broker ensure your broker supplies you with a document checklist. Together you can go through this and ensure all documentation has been received by the broker to be submitted with the application.
This is important as approval delays will result if the lender does not have all the required documents.
7. Know how you can maximise your borrowing capacity As a borrower you should have an idea of how much you can borrow. This is known as loan serviceability.
A number of things are considered when considering borrowing capcity:
– Marital status – Dependants – How income is derived – Bonus income or overtime – Rental income – Government paid income – Credit card limits – Current repayments on personal/mortgage loans – Monthly living expenses
These 7 steps will assist you obtaining the right advice from your lending broker and expediting the lending process. It also gives you an idea what your broker and the lender will be looking to obtain from you.
Mortgages In Focus are an Australian mortgage broker specialising in a full range of lending products such as home, commercial, personal & credit impaired loans. Their customer 1st attitude ensures that each borrowers requirement is addressed so the correct loan product & borrowing need is met for the customer. They are registered with the FBAA, ASIC & FOS. More info: Mortgages In Focus