Need Suggestions to Get a Pre Approval For Home Loan

LBas on 04/07/2016 - 19:05
Last edited 04/07/2016 - 19:19 by 1 other user

Hello all,

This is my first post and desperately require your suggestions on my situation.

Planning to apply for a pre approval for a home loan.

My scenario is -

I do have an existing credit card balance of 12k with a bank. I have saved around 50k towards the initial deposit and other expenses. I am in the process of submitting my application. My question is:

Does this existing balance really effects the pre approval application? I personally think yes it effects.

I have a very good credit rating. I am having an account with one of the leading credit rating agencies and it shows very good rating. I am planning to take the pre approval now and once I find my dream home then I would like to add this existing balance to the mortgage and make it one. Does this really works?

Please comment.

• 

  tomleonhart on 04/07/2016 - 19:51

  Broker here:

  Does this existing balance really effects the pre approval application?

  Yes. The bank will take into consideration your credit limit when assess your serviceability, not just your current balance. E.g: you current balance is 12k and your credit limit is 20k, the bank will take into account 20k.

  I am planning to take the pre approval now and once I find my dream home then I would like to add this existing balance to the mortgage and make it one. Does this really works?

  Yes but this depends on:

  1/ Your ability to service the loan + 12k.
  2/ Your Loan to value ratio(LVR). Ideal is to keep your LVR at 80% so you won't have to pay Lender Mortgage Insurance(LMI), you might want to consider if the 12k is pushing your LVR over 80%. Which means the LMI you incur by consolidation the 12k into your new loan might be render the consolidation meaningless!

  Sorry I can't put ball park numbers down as too many factors are unknown :)

  Hope this helps !

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  bobbified on 04/07/2016 - 20:22

  My understanding is, they will assume that you have actually spent $12K on your credit card.

  Then they will assess your borrowing power based on your monthly income (or annualised), less your minimum monthly payment on $12K, along with your other expenses.

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  chumlee on 04/07/2016 - 20:26

  They will take 3% of your credit limit and add it to your monthly expenses

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  terlalu on 04/07/2016 - 21:50

  I just gave the bank all my info, they did a breakdown for me, and they approved my loan on the condition I bring my credit limit down to 3k.
  Speak to a broker. They do all the work.

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  Ash-Say on 05/07/2016 - 07:05

  I was asked to reduce limit from $30k to $5k if I want a home loan.

  You can always try to increase you limit after few months of approval.

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  Mary Poppins on 17/08/2016 - 21:33

  My hubby and I recently got declined for finance through RAMS cos (I assume) hubby is self-employed and has a 30K bank overdraft. My question is…. is it possible to get a home loan through a broker or should I just give up hope of ever owning our own home (until we've at least reduced the overdraft)?

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    DanC922 on 18/08/2016 - 22:41

    I'm self-employed and work with mortgage brokers, and they definitely have options for self-employed folks. It can be harder, but far from impossible, for people like us to own our own home.

    Feel free to send me a private message if you'd like some help. :)

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  Oz80085 on 30/08/2016 - 17:48

  PAY OFF YOUR CREDIT CARD. Seriously, having money sitting in the bank earning 3% whilst you're being charged 18%+ (usually) on a credit card is just madness. Pay off your credit card and only once you're (bad) debt free should you consider investing.