Becoming attractive to lenders

Hi all,

I know a good LTV would make me a lower risk to lenders but what else can I do to make myself attractive to lenders.

I have got a property under contract and have negotiated 6 months before applying for finance to be able to save more deposit and make myself more presentable to increase my chances of approval.

What's next?

Many thanks

Paul

 

The most effective is to do the simple things right...

• Pay the credit card off in full every month.
• Pay all rent, insurances, utilities and telecommunications bills on time.
• Have a regular savings account.
• Spend thrifty in your everyday account.
• Increase income where possible.

pinkboy

 

Without knowing anything about your situation it's hard to pinpoint anything but generally, minimal applications for credit, especially if you're going for high LVR, minimal employment and address changes, decent assets for your age. No overdrawn accounts or late payments on your mortgage.

 

I normally try a nice dress and some lipstick but that has never really helped me. Maybe I should shave my legs as well??

 

Make sure you wear clean underpants. It always creates a good impression on a date.

Fundamentally lenders want to see a few things:
* Consistent, stable income.
* Good conduct on other debts and a good savings history.
* You need to put something into the deal, which is the deposit.

The best thing to do would be to discuss your plans with a broker now, that way you can get specific advice on what needs to happen over the next few months to ensure you qualify for the loan.

 

This (or your banker) - probably best getting some specific advice running your numbers and scenario than a general 'what can i do to make the banks like me'.

Having an accurate description of your personalised situation is likely to help you more than generalised advice on how to present yourself. If your current credit file is clean, income/serviceability is fine and your financing an acceptable security (i.e. not a tiny little OTP thats 20% overvalued), you should be fine (unless you plan on taking on all the reward CC offers, quiting your job and moving between three places between now and then).

 

So you've had the nip and tuck?

 

Also, if this is the kennel you were speaking about the other day, you'll want to speak to a broker asap - if it's going to be commercial finance you'll need 30% deposit at least. Best to find that out now rather than in 6 months time.

 

Speaking of hard debts, which is worse a credit card or unsecured personal loan?

 

Both are bad, but the credit card generally has a worse effect on serviceability.

Probably the worse one though is novated leases as these take a lot of your standard living expenses (fuel & car maintenance) and turn it into an ongoing liability. Lenders still use a minimum cost of living figure which effectively means they double-dib this type of outgoing cash.

 

Good to know. With credit cards, the limit can be temporarily reduced to pass serviceability calculations - no such option with personal loans.

 

Honestly if you can reduce the limit temporarily and make do, why would you need to put it back up later? The most common reason I hear is, "Just in case", or, "I travel a lot".

It's a bit of a concern that people us a large credit card limit as a contingency plan. Instead why not simply have the money in a savings account? There's nothing stopping people from dropping a large amount of cash onto their credit card and having it in surplus if they're going to need that.

The number 1 reason I've seen people get into financial trouble is because of credit cards and personal loans, by spending money they don't have.

 

Very true but used carefully credit cards with large limits can be quite handy, more so when you don't have large cash buffers. Say, I just bought an IP with most of my savings - factored in a 4 month cash buffer for that IP but **** hits the fan I loose my job and am having difficulty getting another, IP has been vacant for longer than expected and quickly running out of cash. No bank is gonna lend temporary money to ride out my cash flow hurdles at that point in time. Only a credit card with decent limit will.

Credit cards are only as bad/good as it's user.

 

I suppose being in jail will be frowned upon by most lenders. Any thoughts?

 

How would they know? Unemployed is worse

 

Thanks all for the comments. Good to know.

Yes it is that property we discussed Jess. I think you may be right but I am having a crack anyway, nothing ventured nothing gained. Can you think of a reason not to have try? Maybe lost time and therefore lost opportunity? Another credit check and refused mortgage, apart from that I see no downside to trying. The broker is applying for this as a home purchase at 95% unless we can raise more deposit to reduce that LTV.

 

I'm not sure why your broker hasn't just run the security past their BDM to see if it's acceptable under resi terms. There's no reason to wait 6 months to see if the deal will get off the ground. I'm also not sure why they would actually lodge an application like that - did you tell them it's a kennel?

There may be no downside to you, but there is to broker in terms of time and effort, and also to the vendor in having to wait 6 months for the deal to fall over.

If you're thinking they won't find out it's a kennel, they will - the minute the valuer claps eyes on it.

 

If you have nothing to lose, keep that broker in your back pocket and get another broker to look into the security with an upfront val or similar. Like you say, you have nothing to lose, but you don't want to get to just before settlement and realize the broker assumed something erroneously. Remember to give anyone you deal with as much information as possible, including any previous opinions you have had from other lenders/finance people and previous applications.