When you’re looking to buy your first home, you might be surprised to find that you can’t borrow as much as you wanted. You aren’t the only one: the average loan amount for a first home buyer dropped $6,400 in December 2015 according to the Australian Bureau of Statistics, indicating that new investors are getting less finance out of their lenders.
So, how can you improve your borrowing power?
Save for a bigger deposit
Lending is all about risk for the lender. They don’t want to lend too much money to someone who is then unable to pay it back. Your loan-to-value ratio is part of what determines what kind of risk you are: the amount of money you are asking for compared to the value of the property you want to buy.
That deposit is all important. Typically, you will be asked for a 20 per cent deposit, but if you can invest 30 per cent as a down payment instead, you’ll reduce the amount of risk your finance request presents to the lender.
Supply more documentation
Sometimes getting a better loan is simply a matter of determination, on the part of both you and your lender. You might find that you can’t borrow as much as you want because you are considered too much of a risk.
Thankfully, there is a way around that. If you can supply a lender with more information about your financial situation, such as your living expenses or available savings, you will come across as more convincing. If you’reself-employed, you might find it difficult to provide consistent income records, but there are low documentation loans available for people in just that position. It’s just a matter of finding the right lender.
Speaking of which…
Find the right provider
Find a different provider!
Different lenders have different rules when it comes to risk. If you find that one financial institution isn’t willing to give you what you need for your first home, then find a different provider!
It doesn’t have to be a chore either. Who wants to go trawling through hundreds of different lenders? Let us do the work for you. Smartline can provide you with a first home loan selection tailored to your needs, from repayment periods to LVR requirements.
Don’t mope about feeling disappointed – talk to your local mortgage broker at Smartline today.
You can contact a Smartline Mortgage Adviser on 0425158280 for mortgage advice. Or complete our call request form and we’ll call you!