PROPERTY NEWS - While the majority of buyers will require a deposit when applying for a home loan, this is not the only financial consideration that they will need to be taken into account. There are several other aspects that prospective buyers need to keep in mind when preparing to purchase a property.
Being prepared and having money set aside for the costs associated with a property purchase is essential, however, there are also things that buyers should avoid doing during the home buying process, as they could impair the buyer’s chances of obtaining the finance they require. Ideally, buyers should avoid these financial missteps to ensure they maximise their potential for bond approval.
Here are a few financial faux pas to avoid before engaging in the property purchasing process:
Letting your credit score drop
A low credit score will impact buyers in two ways – it will negatively affect their chances of bond approval, and if approved, it will have a bearing on the interest rate the bank is willing to provide them on the loan.
Here are a few financial faux pas to avoid before engaging in the property purchasing process:
Letting your credit score drop
A low credit score will impact buyers in two ways – it will negatively affect their chances of bond approval, and if approved, it will have a bearing on the interest rate the bank is willing to provide them on the loan.
Aspects that will have an adverse effect on a buyer’s credit score include missed or late payments, so it is essential to keep all credit lines current. Payments must be made on time and every month. Prospective home buyers should avoid applying for any additional accounts or credit cards, as multiple credit enquiries will impair their credit scoring.
Too much debt
Where possible buyers should attempt to get rid of existing debt or at the very least reduce it to below 30% of the credit limit. Debt weighs heavily on a consumer’s credit scoring, so it is highly advisable for potential buyers to pay off any consumer accounts that are due, before applying for a home loan.
Too much debt
Where possible buyers should attempt to get rid of existing debt or at the very least reduce it to below 30% of the credit limit. Debt weighs heavily on a consumer’s credit scoring, so it is highly advisable for potential buyers to pay off any consumer accounts that are due, before applying for a home loan.
Having a high debt-to-income ratio affects buyers’ affordability levels, which will have a bearing on the bond amount they will be approval for - if they are approved at all. Disposable cash is a key element to bond approval success.
Spending splurges
Spending big amounts of money on credit before applying for a bond will severely reduce a buyer's chances of getting a bond. Ideally, it is best to avoid making any large credit-driven retail purchases or buying a big-ticket item such as a car, before applying for a bond.
When it comes to big-ticket items credit is not the only thing to be weary of, as large cash withdrawals will also raise concern with the lender. Substantial cash withdrawals may require an explanation during the bond approval process.
Spending splurges
Spending big amounts of money on credit before applying for a bond will severely reduce a buyer's chances of getting a bond. Ideally, it is best to avoid making any large credit-driven retail purchases or buying a big-ticket item such as a car, before applying for a bond.
When it comes to big-ticket items credit is not the only thing to be weary of, as large cash withdrawals will also raise concern with the lender. Substantial cash withdrawals may require an explanation during the bond approval process.
