How to make yourself more attractive to lenders
If a friend asks you to lend them $50, you probably won’t be too fussed as to when they pay you back, but if they ask for substantially more, you may be a little more cautious and ask a few more questions about the repayment before putting your hand in your pocket.
Financial lending institutions are no different. They look at factors such as your age, your income, your expenses, your existing debts, your job status, and whether you have kids or not.
In today’s economic climate, lenders are being more cautious to who they offer loans to. Let’s return to some basics and see what changes can you make so they look at you more favorable.
Know your credit score
Your credit score is important to lenders; it tells them about your credit history and helps them ascertain how much of a risk you are as a borrower, and whether you will make your loan repayments on time.
A credit score is based on your credit history and includes information such as the number of accounts you may have, total levels of debt, and repayment history, and other factors.
If you are concerned your credit score maybe poor, pull out your credit file from providers to know and resolve any issues you might have on your record.
The Australian government’s MoneySmart website has lots of helpful information and a list of businesses you can request a credit score from.
Furthermore more, the website recommends ways to improve your credit score such as by paying your mortgage, credit card and bills like utilities for example, on time and limit how many applications you make for credit.
Review your credit card limit
While you may like having multiple credit cards with high limits ‘just in case’, even if they aren’t at the limit and you pay them off each month, you could be at a disadvantage.
Lenders tend to err on the side of caution, and rightly or wrongly, when considering the amount you can borrow, factor in you spending up to the limit on your credit cards. For instance, if you have two credit cards with a limit of $15,000 each, the lender could consider you may potentially have and additional $30,000 debt.
If you don’t need a high credit limit, ask your credit card provider to reduce the limit.
Reduce and/or consolidate your debts
If there is debt on your credit card, store card, and you have a personal loan look at ways in which you can pay the debt down quicker, or investigate consolidating them all into one debt. You may well get a better deal on the interest rate, and pay them all off quicker.
Review your spending habits
Are there any changes you can make to your monthly outgoings? See if you can get a better deal on your phone plan, internet plan, and energy bills. Review your subscriptions and see if there are any you can cancel.
Any savings can then be put towards either paying down your debts or set up a regular saving plan to increase your deposit.
Contact a specialist
Many of us use the same bank for everything financial, including lending for our homes. However, different banks have different offers, lending criteria, and your bank may not offer you the best deal or the highest borrowing amount.
Using a mortgage broker may get you a better deal for your situation. A well-connected broker will often be able to sort out loans for people with different financial situations, such as for freelancers or contractors, when regular providers have told them they won’t give them finance.
While we’re not financial specialists, having been in the business for over 40 years we do know a thing or two about property! If you’d like to know more about investing in property, our experienced team would love to share its knowledge with you.
We are one of Newcastle’s longest established real estate offices, so give us a call on 02 4954 8833, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office for a chat.