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Promoted by Savvy. No one likes surprises. First time home buyers want to minimise surprises as much as possible. As brokers and lenders, we don’t want to find out our applicants put together half-hearted or incomplete applications. We hate saying no — it’s not good business!
It’s not as complicated as it seems. Here’s a guide to a “bulletproof” first home loan to help clients out as much as possible.
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Figuring out the budget
Many clients come to us with pie-in-the-sky dreams of what they’re asking for. We ask three critical questions:
- How much deposit do you have?
- How much can you comfortably afford each month in repayments?
- How much debt are you paying off right now?
If you don’t have all this written down in painstaking detail, we say hold off on your application. We have seen dozens of Australians make mistakes, leading to unexpected home loan complications.
A home loan is likely the biggest financial step a consumer will ever take; and just like astronauts blasting off into space, you have to know that what you’ve got behind you is 100 per cent correct.
Getting documentation together
The amount of paperwork astounds most home loan applicants; they need PAYG slips, balance sheets or P&L statements (if they are self-employed), tax returns, income statements, credit card balances, credit history and evidence of savings or gifts from others. Good brokers and lenders will go through all that in detail, before we commence the credit check.
It's best practice to help your client get as many savings as possible. You should guide any prospective client to check their credit history first – this is crucial. If there are mistakes on there, it’s their responsibility to fix them. This can sometimes tip the balance toward a lower interest rate.
Don’t fudge the numbers
According to a recent survey conducted by investment bank UBS, 28 per cent of respondents said their mortgage application was not “totally factually accurate.” Five per cent of respondents said their application was only “partially factual and accurate.” Fourteen per cent said they overstated household income, 13 per cent inflated asset holdings, and 17 per cent fudged their debt numbers. Further, 40 per cent of people said they lied in some form!
It’s incumbent on us to check, as credit professionals, and make our clients aware of the risk.
It’s worth mentioning that 600,000 Australians are “at risk of credit default.” Lying on an application only hurts an applicant’s chances now and in the long run. We’re here to build a relationship, and every relationship is founded on trust and honesty.
Brokers and lenders want to lend to clients – it’s like the saying goes; help us to help you!
This blog is promoted by Savvy
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