PURCHASES:

• Make loan enquiries early. The more you know about lender requirements and loan eligibility conditions the better.
• Look at a range of lenders, not just your existing bank. Many borrowers accept loans at 7.15% with fees, when great loans are available at 6.88% with no fees.
• Clean credit history is essential. Obtain an online VEDA Advantage Credit Report on yourself before you apply for a loan.
  Some lenders will not accept applications if there are ANY credit defaults, while others will consider minor credit breaches.
• Carefully calculate how much cash you need for deposit, stamp duty, Titles Office fees, mortgage insurance and legal fees.
  Lenders will need proof that funds are available to meet these costs.
• Select a lender that best meets your needs. Example: some lenders will add mortgage insurance to the loan. Others will not.
• Keep evidence of income: current payslips, PAYG Group Certificates, Tax Assessment Notices.
• Keep evidence of savings. Lenders will require copies of account statements for at least the previous 3 months. Evidence of steady savings accumulation is important. Saving accounts must be held in the borrower’s name, not someone else’s name.
• Keep evidence of lump-sum deposits : tax refunds, gifts, sale of assets, inheritance etc. Explanation of lump-sums is required.
• Ensure that all current accounts (transaction accounts, credit card accounts, loan accounts) are fully up-to-date. Lenders often require these statements to check on borrower behaviour. Payment dishonours, late payment fines and arrears penalties on existing account statements can easily cause a new loan application to be declined.
• Lenders look for steady employment history, preferably 12 months in current job. If not, then 6 months in current job and 2 years in same industry or job role.
• Arrange a written loan “pre-approval” before purchasing, especially for auction purchases. This requires a full loan application, not just a quick verbal opinion from a lender representative or mortgage broker. Opinions are not reliable.
• Select a solicitor or conveyancer to act for you. Their details need to be written on the Contract of Sale. A full copy of the Contract of Sale should be given to them immediately after signing.
• If buying at auction, all purchases are unconditional. Loan “pre-approvals” strongly recommended. With private sales, Contracts should be signed “Subject to Finance Approval ” usually within 14 days. This especially applies to first home buyers.
• Sign a Contract of Sale in your full correct legal names, as appearing on your Birth Certificate or Passport. Full borrower identification is required by lenders and the First Home Owner Grant office. Incorrect names on Contracts are unacceptable.
• Be very careful about buying properties with obvious problems : structural damage, adjoining freeways or easements which contain high voltage electricity towers. Lenders may not accept these as suitable securities.
• If you will live in the property, instruct your solicitor or conveyancer to prepare a “Principal Place of Residence” (PPR) form.
  In Victoria, reduced stamp duty is payable on properties priced up to $550,000 if simple conditions are met.
• Don’t use all your savings. Keep some funds for contingencies and normal property running costs. Budgets are important.
• 2nd home buyers should be careful with finance: before selling your current home, make sure that finance is available for the next purchase. Lender requirements change frequently and borrowers should NOT assume that a new loan is guaranteed.

REFINANCE:

• Many of the tips above also apply to borrowers who are refinancing.
• Clean “VEDA Advantage” Credit Report, proof of reliable income and satisfactory employment history are all essential.
• Lenders will generally require 6 months of loan repayment statements for debts being refinanced from another lender, including mortgage loans, personal loans and credit card debts. Clean repayment history on these statements is required.
• Check if there will be significant costs in terminating loans with your current lender: early loan repayment fees or costs for early termination of fixed rate loans.
• Assess that the advantages of refinancing (eg. debt consolidation, lower monthly repayments, lower interest rates) will justify any costs involved in refinancing.