September 05, 2017
You’ve found a home you love but there’s just one teensy weeny problem…
Buying a home is a serious business, in fact, it’s the main business of your home loan lender and they like to be quite sure about the credentials of anyone they lend to. That’s fair enough, you’d probably do the same. So if there are any issues that could impact your ability to secure a loan, it makes much better sense to be open about them with your Mortgage Choice broker than try to fudge a loan application.
All Mortgage Choice brokers have strong working relationships with lenders, and they can explain your circumstances face to face. It’s something most people would find extremely challenging to do on their own. Nonetheless, it is important to be upfront about any potential problems. It’s a far smarter approach than telling a few white lies because chances are, you’ll get caught out.
With this in mind we look at three problem areas where honestly is definitely the best policy.
A few dents in your credit record
Skipped bills, missed debt repayments, even past bankruptcies…surely a lender wouldn’t know about these, right? Wrong. One of the first things a lender will check is your personal credit record. Even missed phone or power bills can appear on your credit history, and that’s going to make a lender uncomfortable about handing over a home loan.
Most Australians don’t regularly check their credit record, however your Mortgage Choice broker can arrange to secure a copy of your credit record. If it turns out there are a few black marks on your credit record, your Mortgage Choice broker can discuss the reason with you and advise appropriate action to clean up your credit history or explain the circumstances to lenders on your behalf.
Not disclosing other debts or expenses
Lenders take a dim of view of non-disclosure especially when it involves other debts like the third credit card you keep for emergency purposes or expenses like child support paid to an estranged spouse.
As a lender will want to see copies of your bank statements extending back around six months, they’re going to know where your money goes.
Overstating your income
It’s really hard to exaggerate your income on a loan application – and get away with it. For a starters, a lender will verify all of the financial details you provide. If you’re self-employed it’s likely a lender will ask for copies of your latest tax returns. If your details don’t gel with these formal documents, you’ll be hit with a ‘please explain’.
Fibbing about the source of your deposit
You’re strapped for cash for a deposit, and a good mate or family member comes to the rescue with a short term loan. What harm could there be in that? Plenty.
The problem here is twofold. Firstly, saving a deposit is evidence that you can manage home loan repayments. And secondly, even loans to other people form part of your financial obligations. Lenders are under a legal duty to ensure you can comfortably handle your home loan, and repayments on a ‘mates rates’ debt will compete with your mortgage repayments.
If the payment you received was a gift, play it safe by asking for a letter from the provider stating the money doesn’t need to be repaid.
Your Mortgage Choice broker can help
Trying to game the system can see you knocked back for a loan, and as rejected applications also appear on your credit history any white lies could turn a not-so-bad situation into a disaster.
Remember, your Mortgage Choice broker can state your case to lenders giving you the best possible opportunity to secure the loan that is right for your circumstances.
Also, there may be things you can do to get into a better position. It may take a little time so start your discussions early so you get into financial shape before you start looking around for your dream home.
Call Luke on 0428 496 694 to book an appointment today – and secure your home loan guilt-free.