There has been a lot of publicity recently around the difficulty in getting home loans approved. The banks and other lenders are more insistent than ever that income less expenses including the proposed mortgage payment, results in a surplus. The surplus of course provides that essential "buffer" that the lender is looking for - to give comfort should our clients suffer financial hardship at any stage over the home loan term.
Of course, there are other things that make that sought after loan approval more difficult, such as that time when the client forgot to ensure that there were sufficient funds in the bank account to meet that regular direct debit. Or the client just hasn't seen the need to keep banking conduct neat and tidy. "the bank just kept paying the direct debit regardless of my bank balance - they charged me a fee but I thought that was O.K. and assumed they had just given me an overdraft!"
The result of this difficulty is that we all have to work harder to get that loan over the approval line, and this is not always possible with our "main stream" lenders.
Of course one of the things that makes it difficult to get a mainstream lender to approve is that expensive short term debt. Because the debt is short term and at higher interest rates, the additional cost eats into the income that the banks allow for servicing your debt - and frequently gets a "fail". These days it is not unusual to see credit card debt of say $30,000. Most lenders will immediately assess that debt as an additional $900 required in loan servicing. On the other hand consolidating that debt into a 5 year loan at 11.95% means the lender will only take an additional $666 into monthly loan servicing. That extra $234 available to service the really important loan can make all the difference - a "yes" instead of a "no".
So, is there a solution?
Yes there is! There are some finance companies that make it a goal to help getting that mortgage application over the line. Generally this is done by grouping all the small expensive short term loans into one larger loan at a lower interest rate. This of course helps the mainstream lender see that the cost of meeting loan payments is lower.
If you or someone you know are keen to know more - give us a call on (03) 281 8605 or email us email@example.com