Thursday, March 26 2015
Of course what affects your credit score is a closely guarded secret but over time lenders have let a little bit slip here and there.
Pre-approvals are worthless
And don’t even get me started on online loan calculators.
As we discussed in our last newsletter what your income is and what a lender is prepared to use are two different things.
I think the approach most lenders adopt is when someone makes an initial enquiry they just say yes. That way there is a strong likelihood that person will come back to them for their loan if they sign a contract. And the lender gets first shot at it. If the loan is declined or then modified from what they first advised it’s no skin off the lenders nose they just move on to the next deal.
Lenders want you to fix your loan
Most fix rate loans also stop you paying off the loan too quickly.
Lenders pay big money to interest rate strategists to work out where rates are heading and where the cycles are. Fixed rates are designed to make you pay a higher cost of funds than if you stayed on variable.
Your chances of winning the bet are very low. If you don’t believe me go and have a look the Big 4’s combined net profit.
Lenders want you to cross-securitise
It’s not all about the rate
And then there is the cost of mortgage insurance – this can vary by several thousand dollars between lenders.
You’re too old
Valuers dictate the market
Many lenders acknowledge privately that valuers underscoring properties and being inconsistent in their valuation methods has become an issue and are killing good quality property transactions but no one seems to be prepared to do anything about it
The important this in all this is to get appropriate advice. We work with an extensive range of lenders and are familiar with all their different rules, policies and approaches.
This means when we work with clients we give them a realistic appraisal of their options and ensure that the structure that is put in place is designed to benefit them and not the banks.
Contact us for an initial chat to discuss your home loan requirements