Record low interest rates and tighter lending rules, have not only made getting a loan harder, but it seems more people are telling furphies to boost their borrowing power. Here’s our tips for getting finance without stretching the truth.
Getting approval for a loan takes a little bit of effort on your part but it’s worth it if it means achieving your money goal, be that starting a business, or buying a car or house.
Interestingly a recent UBS survey of 1228 Australians who have taken out a home loan in the past two years found only 72 per cent provided information that was “completely factual and accurate”, Fairfax Media reported.
Of the customers who stretched the truth to get a home loan, they either overstated their income, under-represented their living costs, or scaled down their debts.
Here’s how to boost your borrowing potential without the furphies.
What your job says about you
Lenders care how long you’ve been in paid work. Ideally most lenders want to know that you can hold down a job for longer than six months. A decent income that covers all of your outgoings and shows you can meet debt repayments is also what they’ll be looking at.
Your expenses matter
A lender will also look at your outgoing living expenses things like rent, credit cards, other debts or commitments, even school or childcare fees are of interest.
What lenders want to see is that you are making more money than you are paying out on expenses.
Your lender will want to know what you have in the way of assets before they determine how much you can borrow.
Having large debts owing on assets like a vehicle can significantly influence a lender’s decision and it could hinder your borrowing capacity.
Whereas having equity in an investment property or with a share portfolio can greatly enhance your borrowing capacity
Your credit score
A good credit score basically means you have always been reliable at repaying any debts. A bad credit score generally means that you have experienced some trouble with repayments in the past.
Lenders like to see that you are able to save money on a regular basis and over a period of time – the longer the better.
Most lenders require a minimum of 20 per cent deposit on a home loan and that’s irrespective of all the government taxes, legal and real estate fees that you may incur.