Thinking About Getting A Home Loan? Pay Your Bills on Time
For the past several months, we have been discussing how the Royal Commission into banking has affected homeowners in a huge way. Actually, not just homeowners but especially potential ones. One of the many ways the royal commission into banking have affected homebuyers has to do with getting a home loan. Because of the stricter lending conditions. If you’re one of those who wishes to get a home loan in order to buy the house of their dreams, read more.
Part of getting a home loan is to submit the necessary requirements. New borrowers are now required to submit six months of bank statements which would show how stable your funds are. These bank statements would show your track record of both your savings and spending. This was not the case in the past. Before the strict rules were applied, home buyers were only asked to estimate their amount of spending on a monthly basis.
Lenders have become so strict that your ability to pay for debts will also be looked at. If you are gambling, you better expect that it will also be looked at carefully. If you have debts, those will also be focused on, experts say. There are a few debts that lenders would scrutinize. Here is the following.
- Debts from university
- Debts from purchases through buy-now-pay-later services
- Regular spending on clothing, food, and other hobbies.
This scrutiny is not to limit on how you want to spend your money, rather, it's for them to know whether you are able to pay your debts on time. Experts say that borrowers must be able to budget your spending. If you are an overspender or living beyond your means, most likely these banks would not see you as someone who is credit-worthy. Those who are planning to get a home loan but are worried that they are not in good credit standing are advised to go through a three-month financial boot camp. Only if you think you are unsure whether you’d have a harder time getting that home loan.
The three-month financial boot camp would be enough time for you to get your financial state in a more stable situation. Experts also say that this is an effective way to budget your money, which is a training ground for you. Basically, what will be the best indication whether you will be approved of the money you are going to borrow is to have a good track record of saving up. According to some experts, lenders are now asking to see borrowers have at least 5 percent of the price of the property you are eyeing. This 5 percent should be real savings, especially if the deposit is below 20 percent of the property price.
For borrowers to show their discipline in saving up, the three-month financial boot camp should produce savings accumulated. Simply put, lenders would want to see good behavior in terms of borrowers financial standing. If you are thinking of going through the home loan process, pay your debts or bills on time and save up.