Comparison service Compare the Market’s general manager, Rod Attrill, has come up with a handy guide to ensure investors get the capital they desire.
“There have been some positive signs for potential mortgage holders coming about, especially as we begin to see housing prices fall and interest rates cut. However, consumers need to be aware of what they will need beyond a deposit, in order to obtain a mortgage right now,” Mr Attrill said.
1. Ensure spending and saving patterns indicate to a lender that you can comfortably meet a regular repayment amount, at minimum on a monthly basis.
2. Review discretionary spending, such as “buy now, pay later” retail purchases, entertainment spending and frequent restaurant transactions. At least six months before applying for a home loan, do a budget check-up to reduce this spending.
3. Reduce debt. Banks see credit card limits as debt, so if you have a card with $10,000 dollars and $0 balance, it is still seen as $10,000 debt.
4. Showcase good patterns of spending by regularly depositing into a savings account.
5. Look beyond the big four banks, as some of the smaller lenders will offer more competitive rates.
6. Consolidate debts; meaning if you have more than two credit cards, consolidate.
7. Be realistic about the property you’re after by keeping the potential debt at an affordable level.
8. Compare lenders and look for features such as a competitive rate, refinancing options and reduced fees.