Posted Thursday, 18 October 2018 at 10:41 by Shape Home Loans
Tagged: Self employed Loans | property strategies | Loan for investment | LVR for investors | APRA lending laws | increasing your serviceability | Loan for owners occupier | Loan for investor | house prices | First home buyer | property investing | Mortgage reduction | Off the plan | Low deposit | credit inquiries | Credit file | Refinance | Equity Release | Cash out | Low Doc loans | Loan declined | Wealth Creation
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Property price dropping and lending is more tough, What has changed since Dec 2017?
Fear, Royal commission, oversupply and APRA. But in summary it all comes down to the change in bank policy- when buyers find it harder to obtain a loan, it naturally kills off demand...the one left standing are the one with good borrowing power = Opportunistic market.
How has the bank's policy changed?
Previously lenders were heavily focus on income ( Prior to Dec 2017). Fast forward 4-8 month; lender are now more focus on ( In order of importance)
1. Income - Dont get me wrong, income is still an important factor.
2. Personalized Living expense - your spending habits, pattern and cash flow.
3. Debt level - How much debt you currently hold. Current home loans will be assessed on its cash flow if the rate goes up 3% (min 7.25%) with Principle and interest repayment.
4. Personal debt - Afterpay, Zippay, Credit card limits, personal loans, Short term loans and interest free shopping loans.
5. The type of property you are buying and location - Is it located in a high dense area, is it off the plan, how many units are there in the complex, is it effected by noise ( Train, main road etc..)
6. Credit file - Having a clean and not so active credit file is the key to straight forward approval. Since July 2018 most banks moved to the new "comprehensive credit reporting" which is a new system which checks not only your credit but your debits accounts and your repayment history. Summary banks have a lot more data on your than ever before!
7. Deposit requirements- Min 5-8% for most owners and 8-10% for investors.
FUN FACT: Having an afterpay repayment of $100 per fortnight ( $400 purchase, 4 repayments) will reduce your home loan borrowing capacity by as much as $29,000- $55,000 depending on the lender ( All for a $400 purchase)
Having an $20,000 credit card limit - reduces your borrowing capacity by $80,000 to $110,000.