Tag Archive: Mortgage Planning

Relying On a Mortgage Calculator Can Be Risky

Mortgage Calculator

Mortgage calculators are a great way to take into account your borrowing capacity in a couple of simple clicks. Add the amount you want to borrow into the calculator, followed by the length of the mortgage term, plus the interest rate incurred gives you a ball park figure of how much you will have to repay to the lender each month.

But can you rely fully on the mortgage calculator for accurate results? It’s a difficult question, because even though you have chosen your dream property and now you know how much you can afford for your mortgage each month – it should be a walk in the park, yes?

Unfortunately, relying on a mortgage calculator alone isn’t a great idea, the fields are limited plus your lender takes other factors into account. For example, it is unlikely any lender will offer you a mortgage if your credit history is less than perfect. If you have defaulted on payments in the past but managed to pay the debts off and haven’t had any problems since, you may scrape through. You have to be able to prove you are a reliable and trustworthy candidate for them to even consider lending you the funds. The use of a mortgage calculator however accurate, and credit worthy you are today, will not automatically guarantee your loan approval.

Another downside of relying on the mortgage calculator alone is its inability to take into account varying rates over the loan term. For example, you may be offered a 3 year fixed APR at 3.8% but after that it reverts to a variable rate. If at the end of your fixed term, the variable rate is sitting at around 4.5% it can hike a large increase onto your monthly repayments.

This should always be considered. Using a qualified mortgage broker will help you determine what you can afford and also calculate with you how the amounts will alter over time, taking into account your circumstances and loan offer. They will also assist you in completing the paperwork, one small slip in annual earnings, omitting a zero in error will have your entire dreams crashing down around you. Double check all of your paperwork prior to submission and ensure the information you are giving to the lender is 100% accurate.

Mortgage CalculatorMortgage brokers are also beneficial for other reasons, if they have been working in the industry for a while you will find they have good relationships with specific banks and lenders. If this is the case they will perhaps have a loan agreement for a limited period which is unique to them, meaning you won’t achieve the same terms elsewhere. They also become aware of how the lenders credit score your application. Each lender has a specific algorithm which profiles their ideal customer, some are more lenient than others and will offer a mortgage to you if you have a less than perfect credit history. Your mortgage broker will know this and can assist you, taking away any stress of searching for weeks just to be turned down after going through the entire paperwork process.

So, yes, using a mortgage calculator is fine, if used to give you an indication of what you could possibly borrow and the repayments, but remember there are many more factors to consider before you sign on the dotted line. Mortgage brokers Melbourne have been assisting with the customer lending process for years, contact them via www.mortgagebroker247.com.au and they will be able to talk you through everything you need to know.

Importance of Mortgage Planning

mortgage planning

Mortgage planning is a fundamental step everyone should take prior to purchasing a property. Without good solid mortgage planning you could end up buying a home you can barely afford as time goes on and rates increase.

What are the first things you should do when Mortgage Planning?

Check your credit rating, this is probably the first, most important step you can take. If you don’t have a perfect credit score, then don’t fret – each lender has their own set of criteria. Mortgage brokers can help navigate you through this sometimes challenging stage. They have relationships with banks and lenders, especially if they are a well reputed company and have been around for a while. If they can vouch for your character with the bank and present a decent credit history – you may receive more favorable terms than you ever imagined.

If you are unsure as to whether your credit history will make the grade, let your mortgage broker take a look – certain banks have different lending criteria. Perhaps one lender insists you have never had any defaults in your lifetime, the lender next door says ok, you have had two defaults but you rectified this and settled them and you have been in secure employment for the past seven years, you will do for us. It’s as simple as that. Working with a mortgage broker who knows each banks limitations will ensure you have a fair chance at gaining a loan at a decent rate of interest.

The lender will also want to know if you have an existing mortgage. Are you selling that property to purchase another home? How much profit are you likely to make in that postcode area? Are you purchasing a new home at a fair price or below market value? How much have house prices in that area risen over the past 5 years? Banks and lenders all want to know they are going to get their money back one way or another. All these factors add up to a mortgage approval.Read this news now!

Where is your deposit coming from?

Lenders like savers, if you have saved for your down payment whether it be 5, 30 or 50% of the total purchase price, lenders love that you plan for all eventualities. We know in reality this isn’t always possible, perhaps the deposit was a gift from a family member, or it could be tied up in equity in your current home. Each set of circumstances can have a positive or negative effect on your purchasing a new property. Structure this information in a way that the lender will understand – a good mortgage broker speaks their language, sit with them and formulate a presentation which ensures you gain the mortgage you require.

Do you work? If so what do you do?

mortgage planningIf you are self-employed be prepared to show your tax returns and accounts for the past 2-3 years, mortgage lenders may also want to see your business plan and forecast for the years ahead to ensure you stay on the right track. Any company bank accounts should also be presented, plus all personal accounts and savings. Make sure you have all of these in place before you proceed. It’s harder to gain a mortgage if you are self-employed as income can be seen as sporadic by lenders. Convince them that you have steady work and your business is on the increase, give them everything they need and they won’t have an excuse to turn you down.

If you plan to change jobs in the next 12 months this can also go against you, or you desire to go traveling, or even retire. Lenders like stability in all areas of your life, bear this in mind before you approach them for a mortgage. If it takes a little longer to put everything in place, then so be it – it’s better to get it right the first time than to fail every time. Speaking with a qualified mortgage broker in each case will help you understand each lenders criteria and the importance of mortgage planning.