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- In First things first - Steps before applying for finance, Tricks of the trade - how banks fool borrowers
Nowadays, everyone knows that when you are looking to buy a house, the first step is to see how much you can borrow and what sort of interest rate you can get. The problem for many though, is that once you approach the bank, they will likely convince you to submit an application on the spot, in order to find out this information.
Each time you do this, a record of the application is left on your credit file. Unfortunately many Australians do not realise the impact that this record can have on their ability to obtain finance.
If you wanted a quote from three different banks, and ended up with three marks on your credit file, this can have a devastating affect on your ability to take out a loan, to secure a good interest rate, or to borrow the percentage of the property that you require. Banks can be very touchy in any case where you wish to borrow more than 80% of the property value. This is because in most cases, its not only the bank that is making a decision about you, but also the mortgage insurance companies.
The mortgage insurance companies in particular will “score” you on the history in your credit file. Too many enquiries – which usually means two or more recent mortgage enquiries, can make them reluctant to want to grant you a loan.
Not only does this have an impact on your ability to take out a mortgage, but you will also be scored if you decide to apply for a vehicle loan or a personal loan at a later interval.
Whilst you may have set out to get a great interest rate, these multiple enquiries from shopping around can lead to you being declined for finance, even if you never took out any of these loans!
It can also lead to you being approved with a much higher interest rate, than if you had never shopped around to begin with.
Now I am certainly not saying not to shop around, but when you do so, do not let the banks put an application in for you, until you are confident that they are going to give you the amount that you want, and the interest rate that you want.
A better way to shop around, is to talk to us at Bee Finance Savvy. We understand what banks and mortgage insurers look for, and we are able to give a very reasonable assessment upfront, once we look through your financial information, without leaving a single mark on your credit file.
If you would like to know how much you can borrow, or whether you are eligible for a loan, including for borrowings up to 95% + of the property purchase price, speak to us for a complimentary assessment.
We can negotiate interest rates for you, without affecting your ability to be successful in receiving your loan approval.
Call us on 1300 140 554. Or email firstname.lastname@example.org
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