We are seeking to apply for a home loan so I have been lurking on these forums to gain some knowledge. From what I have read, we may have a stumbling block to loan approval due to excessive credit enquiries.
Our situation is we have a stable combined income ($150k/annum), 2 credit cards with limit of $7000 between the 2 and 1 personal loan with $13000 and 4 years left to pay off. We have 5% genuine savings.
However, due to a complete lack of understanding about my own credit file, in the past 5 years, I have had 23 credit enquiries (personal loan shopping/signing up for cc bonus points etc etc). In the past 18 months, I only have 1 enquiry. My partner has 4 enquiries over 5 years.
Will this amount of credit enquiries on my file affect our home loan application? We don’t have any defaults etc and have never missed a payment on my credit card and personal loan. I don’t want to apply unless I am certain it will get approved – don’t want another hit on the credit file otherwise.
Thanks
Numerous credit inquiries can be an issue.
There are lenders or will take this into account and lenders who will overlook.
Sometimes you will see the term credit scoring, loans can get thrown out before they get to a human.That is part of how we mortgage brokers can make a living, we should be able to advise you on your options in placing a loan application wisely.
Nothing is certain these days on a loan application I am sorry to say, but brokers are finding it slightly easier to estimate success or fail.
My advice is do a pre-approval, it is likely one extra inquiry will not break the show.
The way to think about a loan application (IMO) is:
1) Can I pay? Deposit, equity, repayments after all my other expenses.
2) What debts do I have?
3) How well have I paid those debts (any defaults)?
4) How long have I had my job or similar industry?
Same for partner if two of you, but if one is strong they can cover the other.
5) Is the property worth what I am paying for it? valuations are tough.
6) If relying on income from the property is the rent good and reliable?
Other matters taken into account
Multiple credit applications – can I account for each credit application?
How long have you lived where you lived?Regards
NickHi there
Lenders generally look at the last 12 months so you should be ok from that perspective.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Away from what the boys have said in regards to the number of enquiries i would go a step further and say that at a 95% lvr it is going to be a tough gig.
Irrespective of how many enquiries the fact that you have a P/L 2 C/cards and on joint income of $150K only have 5% gen savings isnt going to be many lenders / mortgage insurers cup of tea.
You are really going to want a lender that doesnt credit score straight off the bat otherwise i dont see much hope.
A few lenders manually assess every deal and that is the only other area where i can see any chance.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Cicso
I don't think you have too much to worry about. Although I definitely wouldn't go applying for anymore finance unnecessarily. As Jamie mentioned the last 12 months is the most critical. If your payment history has been conducted well on your Personal Loan and Credit Cards (no late payments or over limit) a broker could use these to mitigate risk to the lender/mortgage insurer. Most importantly, if you have 5% genuine savings, stable employment history (2yrs with current is a +) and stable residential history (again more than 12 months current address) these will assist with a positive credit score. In most cases I wouldn't apply for Pre Approval (but that's just my opinion, unless you're ready to buy), it's just going to be another eqnuiry on your credit file. Also many lenders don't formally assess a Pre Approval (it's used as more of a Marketing technique, effectively they tell you you're approved, subject to fine print, and then you stop looking for finance only to find out when trying to move forward they didn't look at your supporting documents or check with their Mortgage Insurer). I am not saying it's a waste of time, as depending on the State you're buying in, it can be more important. Are you ready to buy now? If not, then continue to save, while you continue to look.
As the other brokers have pointed out a good broker should be able to point you in the right direction in terms of lenders. Some are going to be better than others in this situation.
Best of luck!
Just as a side note- you mentioned you have 5% savings….are you going to be capping the LMI ( borrowing) or do you have enough funds for the LMI as well?
95% Lend is not impossible as you only had 1 in the last 18 month….but also it wont be a walk in the park; and it will also depend on a numerous number of factors; so hard to say.
But if your going to go for 95% + LM = essentially ~97% then i would reconsider…
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Thanks all for the insights and further information. I think it is now clear to me that I should definitely have more than 5% deposit before I attempt to get a home loan and make a purchase. Back to saving we go!
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