It is not easy to obtain approval for your home loan. Study the guidelines thoroughly prescribed by credit and finance firms. This should facilitate the approval process and help you deal with potential problems.
Make sure to make your mind up on the loan limit. Determine your budget and payment capacity for monthly repayment. Be sensible with your budget. Add a buffer of five percent so you will not be short in amortization. There is a mortgage repayment calculator that helps borrowers make out the amount you can afford. Consider likely upfront fees at the same time.
Your economic position must be stable. This is essential to secure approval for a home loan. Lenders will check if you have a permanent occupation along with constant rental history. Refrain from transferring to another company if you wish to be approved for a loan. Understand your credit standing since credit history is also a big factor to be considered by the lending agency. Unpaid debts can lead to disapproval. Look at your credit file by visiting reputable sites in Australia.
Prove that you can subsist comfortably within your earnings. If you own a credit card, bring down your limits. Avoid using multiple cards. Remember every $100 of credit limit that you possess, reduces your borrowing capability by nearly $500. Personal loans are also a big factor. Less debt means a higher approval rate.
Your bank accounts should be in order. Bank statements must be in order to show a positive impression to lenders. Late payments or overdrawn accounts will not help in your bid to get a home loan. Majority of credit institutions will ask for the latest (three to six months) of bank statements. Self-employed persons should have updated tax payments prior to applying for any home loan. If possible, seek the professional assistance of mortgage brokers. This service provider can help you deal with the approval procedures and provide you with a short list of potential lenders. Trusted brokers will see to it that you are given the most reasonable deal.
One primary reason for not being granted a home loan is your credit record. Excessive applications and defaults can result in automatic refusal. Almost all lenders are tentative if the prospective borrower has numerous credit issues in the past. Failure to divulge concerns like possession of credit cards and wrong information about employment can also lead to disapproval for a home loan. Any lapses, whether unintentional or not, calls for extra checks by the lender.
Important Advice for Owner-Builders: Finance Before Building Your Dream Home
It is a dream for owner-builders to build their very own new home. There is no greater satisfaction for owner-builders than to admire their new home. Building a new home requires great amount of work and money. Often owner-builders spend their money on the following things:
>> Excavating their land; and
>> Pouring the slab.
It is only after they have completed the above-mentioned work they realise that:
>> They have run out of their own funds;
>> They have no money left to finish building their new dream home; and
>> They require finance for completing the project.
Can Owner-Builders experience Problems while getting Finance?
The short answer is yes. Owner-builders often realise that:
>> Many banks do not like to lend money, and if they do, they will usually lend around 50-60% of the value of the land plus costs (This is often not enough to cover the construction of their new dream home);
>> They are often being loaned money by the banks for something that does not yet exist; and
>> They need to convince the banks that they can get the job done on time, and within budget.
To avoid financial problems, you must prepare beforehand and start working on getting loan approval from lenders/credit providers.
Quick Information
Here is a list of things that you need to consider:
For an Owner-Builder Project:
>> Funds are usually advanced in five progress stages;
>> Lenders/credit providers will only pay out once each stage has been fully completed; and
>> Before a stage is paid out, a valuer needs to sign-off on each completion stage.
As an Owner-Builder, You will be required to:
Pay a deposit, when you order the materials. This means you will require a large percentage of your budget (sometimes 50%) at the start of your building project.
Preparing your Building Project Documents
You should approach the building project in the same way as a building contractor would. This means preparing:
>> Your professional “plans” and “specifications”;
>> A detailed and accurate building “cost estimate”; and
>> A proposed “construction schedule”.
So, before you start excavating your land and pouring the slab, make sure you have your dream home completely designed, built and paid for, on paper.
Seek Expert Advice
Building your home is a wonderful and satisfying experience that can save you money. But, when things go wrong, it can take an immediate toll on your finances.
So, get expert advice right from the start. Employ the services of a finance broker who specialises in owner-builder finance, and who knows exactly how to help you.