With interest rates uncertainty, everyone is busy shopping around for the most competitive home loan. However, just as important as finding the best deal is making sure you have all your ducks in a row before applying – and what you say online could have an impact – so be careful when posting life status updates into cyberspace.
It is in our nature to connect with other people – and tools like Facebook, Twitter, LinkedIn and MySpace all make this much easier… but they also blur the lines between social, personal and business connections. We all know the stories about bosses catching out employees claiming to be off ill, or staff being fired for slagging off their employer, but many of us have not also considered the broader implications of such postings.
There has been a recent increase in stories covering this topic in the media and the lesson to be learnt is simply “what happens in Cyberspace, stays in Cyberspace… forever!” People can read what you write and most of these networking sites allow EVERYONE to see your status updates. Postings may have a very short shelf life, but that’s not to say that they won’t come back to bite you.
It is not far fetched to envisage a future where lenders check your social media profiles as part of an eligibility check; have you posted anything that could work against you?
Employment and income stability are crucial in determining the overall risk you pose to a lender. “Two more days and I’m outa this place....woo hoo!” may be exciting news to your friends, but perhaps not so well received by your loan consultant. Change of employment after formal approval, but prior to settlement could result in a declined deal.
With only a few days until your loan is approved, your excitement gets the better of you. “Can’t wait to be holidaying in Prague next month” reveals the ‘real’ reason you are obtaining excess funds for your loan.
Of course your lender wants to know your payment habits before loaning you a large sum of money. “Call me as I can’t make outgoing calls. Haven’t paid bill so they’ve disconnected me!” will not go a long way to assist your creditworthiness.
The number of dependents you have can significantly impact your household living expense assessment. “This is pic of me with my seven children” might not be the same family structure you described during your loan application process.
A lender considers your partner as a dependent, if you cannot show evidence of independent employment/income earnings. Your application specifies that you have separated, however the photos you recently posted of the two of you canoodling suggest a very different story.
So think twice before you tweet – and don’t say anything you wouldn’t want your employer (or your mother!) to review; and perhaps in the future; your financial institution.
With that in mind, now is probably a good time to cover off the requirements you need to meet to secure a loan given current market conditions.
Buying a home is an exciting step, but in order to qualify for a loan, you need to familiarise yourself with what lenders are looking for. Best thing you can do is be organised and over prepared.
So, here’s what you need to know :
- Employment Record / Repayment Ability - Longevity in your job shows stability and helps strengthen your application. A strong application is one that shows employment with the same employer for two consecutive years or more, although some job changes can be looked upon favorably, particularly if resulting in more pay or career progression. Business owners must also provide documents to show that they have been in business two years.
- Saved Deposit / LVR - Get your deposit together. Lenders look favourably on proof of savings and a large deposit as it shows commitment on the part of the borrower. Lenders want to know how much you are contributing to the overall cost of the home in order to calculate your Loan-to-value Ratio (LVR). The current minimum LVR required by MyRate for a purchase property is 90% and 85% for a refinance.
- Credit History - Your credit history is a big deal to lenders. If you have paid all your bills on time in the past, you’re more likely to pay on time in the future. Keeping your credit balances low can also go along way to improving your credit report.
- Limited Debts - The less money you owe the better. Maxing out your credit cards makes you a risky borrower, as it suggests that you may not be able to manage your debts. Before applying for a home loan you should reduce revolving debt where possible. The payments for your new loan should be comfortable to make.
- Documentation – Of course we had to get to this. In order to be approved for a home loan, documentation will be required for identification, income and savings verification. Documents such as bank statements, pay slips, lease agreements, tax returns, and various forms of ID are a standard requirement so it pays to be prepared and have these easily accessible.
If you want to be empowered to make better decisions throughout the loan process, visit MyRate’s Education Centre.
With a strong focus on building consumer knowledge, this resource includes a step by step guide on the loan process and tips on how to speed up your application.
Read about MyRate customer reviews at www.myratereview.com.au
The MyRate team
