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Don’t

  1. Move jobs or residential addresses in quick succession over a few years – banks look at stability by way of your job & residential address changes
  2. Go for numerous credit enquiries (for home loans / personal loans / car loans / credit cards) in a short time frame
  3. Have overdue debts and defaults as these get listed on your credit file for 5+ years (and if you do run into an oversight with a listing on your file)
  4. Be late for payments on mobile phone, electricity and gas bills
  5. Buy goods on interest free store promotions
  6. Purchase leave as this impacts your annualised income and therefore borrowing. Depending on the lenders, a pattern of unpaid leave can mean even if you are happy to stop this purchased / unpaid leave, the banks will still take this for borrowing calculations
  7. Salary sacrifice to superannuation (unless you know this can be stopped at any time) as this impacts your annualised income
  8. Salary sacrifice to acquire car leases or other goods – these are treated as a liability
  9. Increase credit card limits – even if you pay off your credit cards in full every month, the banks take 3% of the credit limit as an ongoing liability

Do’s

  1. Try to go for LVR’s below 88% plus LMI i.e. 12% deposit. This gives the best value for lenders mortgage insurance
  2. Ensure stability of job & residential addresses – this helps ‘credit scoring’ amongst many other criteria
  3. If you’re considering changing jobs, get your purchase out of the way before you make a move on the employers. Different banks have different lending policies and your situation may be limited by a certain lender’s policy. Again, stability helps open a lot more doors
  4. Ensure you have accumulated savings over a period of time (if borrowing over 90%) as banks require to see 5% of the purchase price / property value as ‘genuine savings’
  5. Ensure good account conduct with no arears on your bank statements or credit card statements, as any arears will result in a decline or you requiring to wait for a long period of time before you can go for the purchase. In the near future, the banks will be able to share this account conduct data as well. Typically, banks require…
    1. 1 month transaction statements for every day accounts for submission,
    2. 3 months savings statements for genuine savings and
    3. 6 months loan account statements for refinances

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Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice

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