By Mark Di Paola
The Reserve Bank has recently decided to leave interest rates on hold for the 22nd consecutive month. With interest rates at historic lows and many media pundits spruiking doom & gloom, now may just be the best time to snap up a bargain.
But what are the most important things you need to know to get your finances approved quick enough to strike if a great deal comes your way? I recently asked one of my colleagues Ahmed Hossain from Loan Gallery to share some of his most important tips. See his expert opinion below along with some of today's best finance deals
1. Servicing capacity: this is where a bank determines a client’s maximum borrowing based on their earned income and monthly living expenses. New policies are reducing the amount a bank is willing to lend based on your disposable income. But there are some strategies available to improve your servicing capacity:
Reduce unsecured debts like credit cards, store cards, personal loans, car loans etc
For example, a car loan payment of $750 a month could reduce your borrowing power by $80,000 and a $20,000 credit limit on a credit card even if you haven’t spent a cent could reduce your borrowing by $50,000.
2. Monthly living expenses: Monthly living expenses has been a hot topic in recent months, rather than relying on a benchmark figure as was previously the norm, banks now need to verify your monthly expenses against that which is being debited from your bank account or credit card.
i.e do you have a monthly $120 gym membership and $200 yoga membership or any other reoccurring payment? These are all now being heavily scrutinised and will reduce your borrowing capacity once more! Perhaps these expenses are better requested as birthday and Christmas gifts from family and friends…
3. Credit history: lenders do not like a busy credit file, meaning someone who regularly applies for credit, specifically unsecured credit like credit card, store card, pay day lenders etc. So if you’re looking to borrow better not to apply for credit for now and keep your credit file neat.
Some of the most competitive rates on offer at the moment for owner occupier principle and interest repayments:
AFG Home loan – Edge 3.69%
ME Flexible home loan members package 3.69%
Macquarie Offset Home loan 3.79%
Westpac 2 years special variable discount 3.59%
Discounted standard variable with big 4 banks with an offset is about 3.70% to 3.99% depending on customer’s situation.(LVR restrictions and general lending criteria apply)
To book a free finance health check contact Ahmed Hossain below
Ahmed Hossain
Senior Finance Broker
Loan Gallery Finance Pty Ltd
03 9495 5099 | Ahmed.hossain@loangallery.com.au
$150 Million in Approved Loans
|Diamond Broker – Commonwealth Bank |A+ Prestige Broker Westpac |Premium Broker – ANZ
MFAA accredited business | Australian Credit License 475302 ACR:#444108