Banks will check your sav­ings his­tory

Western Suburbs Weekly - - Liftout: News -

WHEN you are look­ing to buy your first home, you need to make sure your fi­nances are in or­der as many things can af­fect your chances of get­ting a loan ap­proved.

Re­solve Fi­nance direc­tor Don Crellin of­fered the fol­low­ing tips:

Fo­cus on sav­ings

More and more lenders are now look­ing for per­sonal sav­ings and while you do need to have a de­posit, there is a fo­cus on “genuine sav­ings”.

This refers to sav­ings that have been made on a reg­u­lar ba­sis or have been held in the ac­count for a de­fined pe­riod of time.

It is not just about the bal­ance that you have in your sav­ings ac­count, it is also all about how it got there; the banks need to see that you can be dili­gent and stick to a plan.

Pay your bills on time

Your credit his­tory is ex­cep­tion­ally im­por­tant and no mat­ter how small your bills may be, a late pay­ment that triggers a de­fault on your credit record could mean the dif­fer­ence be­tween loan ap­proval and de­cline.

Of­ten a com­pany pro­vides a de­gree of lee­way past the due date be­fore lodg­ing a de­fault on your credit file, how­ever keep in mind they are all dif­fer­ent.

My ad­vice is to al­ways pay bills on the due date to avoid the risk.

If you are hav­ing dif­fi­culty with mak­ing the due date, con­tact the provider and let them know.

Most com­pa­nies are will­ing to work with their cus­tomers to be able to re­solve the is­sue as long as they are made aware. Cut back on credit Lenders as­sess your credit card com­mit­ment as if it were fully drawn to its limit, re­gard­less of how much you have ow­ing.

For ex­am­ple, you may have a credit card with a limit of $15,000.

Even if you have noth­ing ow­ing on it at the time of the home loan ap­pli­ca­tion, the lender will make al­lowance for a monthly re­pay­ment of about $450.

This can re­duce bor­row­ing ca­pac­ity on a home loan by be­tween $50,000 and $60,000.

My ad­vice would be to re­duce or close any credit cards ahead of ap­ply­ing for your home loan. ■

Don Crellin.

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