DRAGGED BY SPENDING
paper, they send it back,” he said.
He said online and smaller banks were becoming popular with applicants as they offered much quicker approval times for loans.
Mr Borg also warned while obtaining pre-approval was helpful in allowing buyers to purchase a property imminently, it could also hinder loan applications if overused.
“Every time you apply for pre-approval, it marks your credit file and that can work against you,” he said.
“Apply for pre-approval once you’re ready to make a move.”
The Australian Prudential Regulation Authority’s move to increase the minimum interest rate buffer on home loans from 2.5 to 3 per cent would “impact people’s borrowing capacity”, Mr Borg said.
APRA estimated the change – which is aimed at cooling the hot residential market – would reduce “maximum borrowing capacity for the typical borrower by around 5 per cent”.
“It will impact people on low incomes, your first-home buyers and the like,” he said.
But Mr Holm said the mandate only applied to authorised deposit-taking institutions, or major lenders.
He suggested shopping “elsewhere for maximum borrowing powers”.
“You need a broker with a wide range of lender options and the knowledge to analyse which … model is for you,” he said. 1. Credit card limits
The lender looks at the limits, not what you owe, so consider closing or reducing the limits on any cards you don’t use. 2. Review your transactions Transactions like Afterpay, Sportsbet, Uber Eats and interest-free cards can affect your application. Take the time to “clean up” for a few months.
3. Late payments on loans
Overdue rates notices or outstanding payments will reflect negatively. Ensure all your payments are up to date.
4. Living expenses
Take the time to state the correct and full amounts. The lender will cross reference your bank statements to see if they match your stated expenses.
5. Be organised, especially if selfemployed
Self-employed applicants will need to provide two years of tax returns and business financials. Provide proof of income.
Source: Graeme Holm