How to get a home loan: am I screwed?

• 

  Quantumcat on 15/09/2018 - 17:32

  +3

  Go to a home loan broker and give them this information, they can tell you what you need to know (they're experts, we're not).

  I can tell you one thing, credit card limits do matter (I had to reduce mine to $1K), but you can reduce it just before you get the loan and increase it again later

• 

  dcep on 15/09/2018 - 17:35

  +2

  get a pre-approval as an indication of what you can borrow

  prolly 350-400k with your credit card cancelled

  but need 20% deposit to put you into good position, so 500k property = 100k deposit + stamp duty/legal cost/fees

  • 

    wordplay on 15/09/2018 - 20:08

    +1

    regional (depending on where), so shouldn't need to spend 500k on a property

  • 

    [Deactivated] on 16/09/2018 - 06:37

    +2

    Only get a pre-approval when you are seriously ready to enter the housing market as pre-approvals will be listed in your credit history under "credit enquiries" for the following five years, even if you don't end up borrowing any money.

    By all means, talk to a mortgage broker and they can work out the rough sums.

• 

  Ocker on 15/09/2018 - 18:10

  +1

  Credit cards matter to the extent the lender will assume you are maxxed outed on the card and they will use the monthly repayment required as part of your monthly outgoings - regardless of whether the card has a balance or not. Hence the rationale to reduce the card limit as much as possible.
  It's a brutal world out there for borrowers right now, thanks to the Banking Royal Commission, the banks are being ultra conservative in lending.

  • 

    dcep on 15/09/2018 - 21:15

    not just upto the max cc limit, last i remember 6k cc limit reduce the borrowing power by 20k or so ..

    could be dependent on which borrower

• 

  onevstheworld on 15/09/2018 - 18:27

  +4

  Get a broker… the amount you can get from different lenders can be wildly because of the slightly different ways they consider types of income and debt.

  -How long do you think I'd need to have in my current position before I'd be a decent candidate?

  As long as you've got a permanent position, you only need to be in a position long enough to collect 2 payslips.

  -Does HELP debt matter? I could easily pay it off if need be.

  Yes, it does. But ask your broker… you may be better off having the money as part of your deposit.

  -Do credit card limits matter? I have a $12k limit. I pay my bill off in full at the end of each month but someone told me this is still considered 12k debt in the eyes of lenders?

  Yes, "someone" is correct… in their eyes you owe 12k despite paying in full.

  -Is there anything else I should be doing to make myself a more attractive candidate?

  Don't go get pre-approvals from a dozen different lenders yourself. Each pre-approval is recorded on your credit score… do it enough times in a short period and it'll hurt your score. A broker can run your situation through those same dozen lenders without that problem.

  I assume you're getting a principle place of residence… you should aim to save 20% for deposit, plus ~5% for purchase costs (stamp duty, conveyancer fees, etc). Some lenders will still accept 10% deposit, but you're going to be up for lender's mortgage insurance, which you should avoid as much as possible.

  Sounds like you're eligible for the First Home Buyer scheme, so don't forgot to look into that.

  If you're disciplined with your money, get an offset account linked to your loan.

• 

  nedski on 15/09/2018 - 18:34

  Jesus man, you are in a better situation then when I got my first home loan for my 1 bedroom apartment.

  I scraped in over the line for my 5% deposit for my $290k apartment.

  I see that you are in a Government job, if you are in Canberra like me, send me a PM and I will hook you up with my mortgage broker. A number of people at work have also used him and he is pretty awesome.

  And before some mod tries to ban this comment or whatever, no this is not a referral / commission type deal. The broker is just really really awesome.

  Good luck.

  • 

    caffeinesloth on 15/09/2018 - 19:33

    Cheers but unfortunately I'm not in Canberra. Thanks anyway.

• 

  [Deactivated] on 15/09/2018 - 18:38

  +2

  Uhh? What's the problem. Worst case scenario, wait another 12 months. Not the worst time to wait anyway.

• 

  caffeinesloth on 15/09/2018 - 19:37

  +3

  Thanks everyone. I'll chat with a broker.
  Don't even need a credit limit as high as I have so I'll lower it anyway.
  And where I'm located I can get a pretty decent 2/3 bedroom house for $275-300k so a 20% deposit isn't too far off :)

  • 

    nuwanwanasinghe on 17/09/2018 - 12:46

    Worst come to worst you'll have to stay for another 6 months may be. But anyway it's good to talk to a mortgage broker.
    Cheers!

• 

  yolo123456789 on 15/09/2018 - 22:53

  +1

  Most people have pretty much covered everything, but just want to add on in terms of the uni debt. First of all it does matter and basically what the bank look for is a recurring expense or liability. Having said that the bank can only take it into account if they can see the expense (technically). I'm assuming right now your payslip says your pay and how much you got taxed in that pay and also how much you pay the uni debt (usually a % based on how much you own I think). And this uni debt amount that you pay each time you get paid, the bank is going to think it's infinite, even though we all know you only got 14k left to pay

  Which brings me to this point, that from memory you can set your pay with your employer so that they don't take out a portion of your pay towards paying off your debt each time you get paid, which means when the bank look at your payslip it's just going to say how much you make either a week or a fortnight and how much you got tax without the extra amount that you need to pay off your uni debt.

  But you have to realise that at the end of the financial year when you do your tax return, it's still going to take uni debt into account and that's when they will take that lump sum of money that you would've paid at each of your pay, but instead you just pay at the end, which could also mean that instead of tax "return" you might actually need to pay something. But it all balance out anyway.

  This is just based on my experience anyway, hope it make sense and helps. anyway good luck with it.

  • 

    Sofie519 on 16/09/2018 - 10:31

    +1

    It doesn't matter if she has HELP/HECS taken out of her pay or paid at the end of the year with taxes. The Lenders expect you to work out the annual HELP repayment using the ATO calculator, and based on her income, work out how much she needs to pay in the application year, and take that out of her disposable income.

    OP. Wait til U speak with a broker to work out how much you need to reduce your credit limit by, as it would be different depending on the lenders servicing calculators. Work on that 20% to avoid LMI and you should be right. Most brokers will guide you with projections and savings goals to take most of the guess work out of your purchase

    Goodluck.

    • 

      yolo123456789 on 16/09/2018 - 10:43

      what you say makes perfect sense, and what I've mentioned above I guess you could say it's a loophole (in certain cases?) and I suppose some applications could more pedantic than others, and by no means I'm encouraging people to borrow money that they cannot repay either.

      I'm really just talking from my own experience that when I bought my first 2 properties I didn't have it shown on my payslip and they didn't ask about it either, and when I was purchasing my 3rd property I had also changed employer and had it set to take out at each pay accidentally, so they were chasing me up on that, even though it wasn't a big amount.

      And also yes, definitely talk to your broker, most of the time they can give you a pretty a good idea on what you can or can't borrow before going through all the process.

• 

  xyron on 17/09/2018 - 11:41

  +1

  I found a fantastic broker through OzBargain. Feel free to PM me and I'll pass on his details. As someone who hates using "intermediaries" for any kind of transaction (travel agents, insurance brokers, financial advisers, comparison websites) I am so, so glad I bit the bullet and used a broker, for all of the reasons already explained in this thread.

  If you can get a $300k property in your area that you are happy with, I can't see why your current financial situation would hurt you - but a broker will be able to give you definitive advice about what you would need to do to get your foot on the ladder. Good luck!

• 

  jm7 on 17/09/2018 - 14:33

  +1

  My partner and I have just got pre approval from ANZ for $800k and I was only required to be in my job for 6 months minimum. I am also full time casual and they didn't care. I think you have a pretty good chance of being able to get a loan given my situation.

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  HighAndDry on 17/09/2018 - 14:41

  +2

  Not much to add to all the other comments here, but just wanted to say: Your situation isn't that bad at all, no need to be down on yourself for no reason.

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  Anth0ny on 17/09/2018 - 21:23

  +1

  you are not in a bad position at all.
  Try save 2-3 months more and stack up your saving to 60k (but honestly, there is no need to rush with the market out there like this now)
  Try give this guy a call, 0416 880 585 - his name is Yuwono he is a mortgage broker.
  Based on your situation, I think you can get $440-500k borrowing capacity from banks.
  You can also just opt to deposit 10% and if you are first home buyer you dont need to pay stamp duty if its less than $650k.
  But seriously, your situation is not that bad at all.

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  demiurge on 17/09/2018 - 21:53

  Save and wait for the housing bubble to burst.