Tips to help you get a better home loan easily

A property owner typically refinances their home loan at least once during the life of their loan. On the other hand, a smart mortgage holder typically refinances to another lender at least once during this period as they know, a new lender will always give a better rate to win business.

If you're looking to refinance, here are some tips, so that you’ll be prepared at all times in order to best seize an opportunity when it comes up.

Getting a better rate loan will save you thousands of dollars over the life of your loan. To get a better home loan, some work is required before you apply, especially in this era of heightened concern about responsible lending.

Here are a few tips to make refinancing as quick and pain free as possible:

1. Get all the paper work together

Unless you’re on loansHub’s personal mortgage manager platform, it takes extensive preparation to research the market, negotiate and refinance your property or property portfolio.

Before start your application, create a folder on your computer and collect your latest payslips, bank statements and statements for any other debts the applicants may have. Note, different lenders require evidence covering different date range and a few don’t ask for statements at all.

2. Understand what lenders want

In addition to basic property data such as address, what you think the value of your property is and any rental income, the lender may also want to know:

  • Current loan amount and loan limit;

  • Current loan repayment;

  • Interest rate;

  • Repayment type; and

  • Ownership type (i.e. joint tenants or tenants in common etc).

Lenders also expect that you don’t have an adverse credit history or that your credit score is below what they have benchmarked as acceptable.

3. Know your market

Be well-informed about conditions in the market where you own your property so you have a realistic view about the likely valuation when you apply to refinance.

This will avoid the frustration of going through the refinance process only to find that you have to pay a higher rate or Lender’s Mortgage Insurance because you have less equity than you thought.

4. Make your assets work together

Some property owners also own a home as well as an investment. With some lenders, the larger your total borrowing the better the rate on offer so when you package yours with your investor loan/s it will qualify you for a lower rate overall.

Packaging can mean cross-collateralising. Most lenders prefer to cross securities properties, especially if it will bring the overall loan to security ratio (LVR) down.

While this makes it easier for you to access equity in each property in future without having to revalue every property in the portfolio. If you decide to sell one of your property, it will affect the other properties in the portfolio as the lender will require you to refinance and restructure your remaining loan.

5. Avoid cash-in-hand rent

If you self-manage your investment properties, ensure you have clear evidence of your rental income. Income received cash-in-hand and not deposited in a bank won’t be accepted by most lenders.

You also need to ensure that you have a current lease agreement in place and not just an informal verbal agreement.

6. Be upfront about your purpose

If you want to access equity in a property make sure you can provide a specific purpose for the funds before you approach your lender. Don’t be afraid to discuss your plans and goals with your lender – if you can afford it, they want to lend you the money.

If your plan involves purchasing another property within the next 12 months or any other reasonable purpose your lender can generally help with that. If you don’t want to disclose your purpose, it will be much harder to get approval for a cash-out.

When it comes making refinancing easy, it boils down to keeping good records and having a good credit history.

If you follow this advice, you will be well positioned to approach multiple lenders to see who gives you a better deal or you could simply make life easy for yourself and apply to refinance through loansHub and get access to over 40 lenders on our panel.

Tell us: Enjoyed this article? Tell us what other property related topics we should blog on.

And while you’re here, take our mortgage shredder challenge and discover how much you can save on your home and investment loans by using loansHub technology as your personal mortgage manager. To read more insightful articles, click here.

This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist

 

 

Nav DharanProperty, Realestate