The Reserve Bank’s decision to cut the cash rate may be the spring selling season’s saving grace according to Mortgage Choice.
Potential buyers’ interest in their borrowing capacity has surged in early November, according to Australia’s largest independently-owned mortgage broker.
Since the cash rate decision day on 1 November, Mortgage Choice’s ‘How much can I afford to borrow’ website calculator has experienced a 357% increase in unique page visits when compared to the preceding week in October.
Company spokesperson Kristy Sheppard said, “The difference only one interest rate cut has made to our online calculator hits is impressive. It is terrific to see potential borrowers are on the ball with market condition improvements, already actively researching their new financial potential.”
“It looks like the recent interest rate drop was the signal many buyers were waiting for to spur their property purchase plan into action. I’d say a number of them are especially eager to make a move now to take advantage of grants and concessions due to expire early in the new year.
“Lenders are poised to battle each other to attract and retain these market entrants, offering appealing interest rate discounts and other incentives. However, borrowers may be surprised to hear that despite lenders’ willingness to loan money, their approval process still involves much more than accepting a deposit from someone who can afford repayments.
“Applicants are required to have a healthy income and financial history, limited debt, a steady employment record and realistic expectations about their borrowing capacity. Attempting to cutting corners on these aspects of your property purchase will only hinder your hopes at loan approval.”
Put yourself in a good financial position and boost your chances of loan approval via our checklist:
- Healthy credit file?
Check whether you have blemishes in your credit history, and if so do your best to resolve them with the relevant credit provider before you apply for a home loan. You can check your credit report by ordering a copy from suppliers such as www.mycreditfile.com.au
- Clean bank statements?
It is important your statements are free from suspicious withdrawals or transfers such as movements of large sums of money to/from your account/s. If this does occur, provide evidence in your loan application as to the reason behind the transaction/s.
- Debt free?
Try to reduce your amount of debt, such as car and other personal loans, credit and store cards, HECS, etc. Note the figure owed on your cards isn’t the deciding factor for lenders, they will assess the overall credit limit into your ability to repay the loan.
- Steady employment and savings?
Lenders want to see a stable employment record and evidence of regular genuine savings. Keep in mind some now take into account regular rental repayments, however there are conditions attached so be sure to do your research.
- Eyes on a realistic prize?
There may be borrowing restrictions you are unaware of based on your deposit amount, plus the location, size and type of property. For these reasons, and so you don’t get your heart set on something you can’t afford, consider using a mortgage broker to help you research the home loan market before property hunting.
Source: Mortgage Choice
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