Obtaining a pre-approval for a Home Loan If you’re in the market to buy a property, or looking at refinancing your current home loan, one of the most important things to consider is trying to obtain a pre-approval from a lender. While your mortgage broker is often the best person to compare your options, there are a number of things borrowers can do to improve their chances of being approved.
Having saved a deposit Lenders look at your application and will assess it based on your ability to repay the debt, your track record of paying off debts and how much deposit you are able to put down. The lower your deposit, the more risk you present to the lender. By saving a larger deposit, your chances of being approved for a loan might increase.

Clean up your credit
You can be sure that most lenders will take a close look at your history of paying off debts, also known as your credit score. If you have any outstanding loans that you have a record of late payments, you should look to get back on track before applying for more credit. Obtain a copy of your credit report, review the report and look to see if there are any errors, if so, it is imperative that you contact the credit agency and sort this out – as the result of this could see your chances of obtaining a loan being hampered.

Cash Rate Update | increased to 2.60%

RESIDENTIAL

Paying off your short-term debt Short-term debt with high interest rates hurt your borrowing capacity and will make it harder to get finance. Be sure to pay any credit card debt in full each month and try to avoid taking out unnecessary loans.

Start saving

Lenders like to see that you can manage your money. They’ll want to see at least three months’ worth of bank statements to make sure you have some genuine savings and that you are going to be able to make your repayments if you get approved. You will also want to have enough in your accounts to have some money put aside for unforeseen circumstances arising or extra expenses you hadn’t planned for.

Solid employment

Having a track record of steady employment or business income is crucial, as it gives your lender confidence that you have funds coming in each month to repay your loan. There are lenders that specialize in new businesses and self-employed clients just as there are traditional lenders that like having a lower risk and sticking with PAYG clientele. Choosing the right lender that suits your employment situation is critical.

Most people understand that an effective way to maintain and build wealth is through investing in residential real estate. Property has a long-term track record of capital growth, which is why it is a favorited asset class for hundreds of thousands of Australians.
However, when you’re looking for investment properties to purchase, there are a number of factors you’ll need to take into account. Not all properties make for great investments, so here are a few things to consider when you start looking.
Easy to rent As investors, one of the most important elements of a property is how easy it will be to rent out. The most obvious way to determine that is by looking at the suburb’s rental vacancy rate. A tight (or low) vacancy rate suggests there are few properties available for rent which should lead to the property quickly being tenanted.
Low vacancy rates also put upward pressure on rents which helps to pay down your mortgage faster.
What type of renter?
When evaluating the type of property you want to purchase, it’s important that it matches what people in the area want.

What makes a great investment property?

If you have a property that is not suited to the local market, then it will be hard to rent out and may see lower capital growth.
The most obvious example of this would be looking at the types of people who live in the area.

If you’ve got a family-friendly area near schools and away from the CBD, then the odds are larger houses are going to be in demand. Growing families need more bedrooms, outdoor spaces, large kitchens and bigger family areas. If you invest in a small unit in this type of area, you won’t see the same level of interest from the people that want to be in that area.

Capital Growth

All investors want to see their properties perform well and achieve a strong level of capital growth. Having strong rental demand and low vacancy rates is one factor that puts upward pressure on prices, as people who can’t find a rental or feel they are paying too much, will eventually move to buy.
You can analyze how a suburb’s capital growth might perform in the short term by comparing the number of annual sales to overall listings. Suburbs with a lot of listings and fewer sales will not likely see upward pressure on prices.

Jobs and Amenities

Another factor that contributes to an area being appealing is the number of jobs and amenities on offer. Renters in particular want to be in areas that have plenty of work and jobs available, as well as great entertainment and lifestyle facilities. That can be things like beaches, parks, shopping center’s, cafes and restaurants.
The more reasons people have to live and work in a certain location, the more interest there will be for rental accommodation which often translates into buyer demand.
Easy to maintain
The final factor to consider when looking at rental properties is whether they are easy to maintain. Older
properties can have issues with ongoing maintenance, as you may need to replace things like hot water systems and air conditioning units.
While newer properties might have lower maintenance costs, you may also have to pay a premium to purchase the property in the first place.
Some buildings have strata fees that also contribute to the overall ongoing costs. These can be very high for both old and new buildings, so it’s important to factor that in when deciding on whether or not to invest.

Interest rates are rising as the Reserve Bank of Australia (RBA) looks to aggressively hike the official cash rate to help slow growing inflation. For average borrowers, higher interest rates make it more difficult to meet mortgage payments and can eat into household budgets.

If you’re concerned about rising interest rates, there are steps you can take to reduce your stress levels.

Scrutinize your spending When costs are rising it’s very important to take a close look at where your money is going and priorities what you really need to spend on.
Discretionary or luxury items might be an area you can cut down your expenses. Simple things like eating out or taking expensive holidays could be things to look at to save some money. Savings from these cuts can then be used in more important areas such as your mortgage.
Creating a budget and sticking to it is normally the best way to make sure you’re earning more than you’re spending each month.

Consolidate your debt

If you’ve got a number of different debts with varying interest rates, it could be worth looking at consolidating. Consolidating your debt involves rolling the higher interest debts into one new loan with a lower interest rate. This can help you pay down your debts faster and deal with higher interest rates.
How to manage higher loan repayments

Refinancing

Another good option for those worried about higher interest repayments is to try and find more competitive rates. Working with a mortgage broker can help you compare your options and find different loan products that could potentially save you money. There are normally introductory offers from lenders with competitive interest rates, as well as the option of different home loan products that could be suitable for your situation. Look to downsize If you’re really concerned about higher interest rates and being able to manage your mortgage, then you could even look at downsizing your property.
By finding a lower priced home, you could reduce the mortgage repayment to ensure it is more affordable.

Look for other forms of income

These days there are plenty of ways to earn extra money. Taking on some more work or a side job could be an effective way to improve your financial situation. Interest rates rise and fall over time, so while they are in a phase where they are rising, it could be an opportunity to earn more income to help pay down the debt.