Bank meeting - What to expect? And does my HECS debt make a big impact?
Ok, so I'm trying to prepare for our bank meeting Monday (not Saturday like I thought).
I'm so scared that he's going to laugh us out of the bank. I know we can't afford much. We have little savings. But at the moment we are spending almost 60% of our income on RENT, when Ic ould be spending that much on a mortgage. I just don't think the bank will let us have as much as what we are spending right now on rent (having a sad right now BTW!).
So what can I expect? What should I take? Is everything automated, or would us going in there with the budget we've worked with (and usually stuck by) for a while, and all the information we'd need (payslips etc), we have no debt, we save a lot (we don't have 20% but my parents want to help us with the family pledge thing so we don't have to pay LMI) would that make any difference, or are those online calculator things usually very accurate?
Oh, and - does my enormous HECS debt imapct us heavily? I, sadly, don't earn enough to pay it back yet.
Just a bit scared of being told we can only borrow $5...
Good luck Leasha.
They do work on a formula but I don't know what the formula is! Even though you are paying rent that is as much as your mortgage I am assuming you've taken into account the extras like repairs, maintenance, rates, insurances & interest rates increases? This is where the bank's formula will come in.
Yeah we've tried to include all of the extras and even looked at the history of interest rates on the RBA site, and if we could afford it if interest rates rose... It still puts the mortgage at above the 40% that they say should be your limit that you spend on housing.
My H told me the other day that all bank loans are approved by computers these days. Purely numbers and no bank manager sway... not sure if that's true though.
I'm pretty sure no-one ever asked for my HECS debt details. It's not like it's a real debt that you have to pay off outside of paying extra tax.
I've heard it looks bad on your credit rating to apply for too many loans and be declined so be wary of applying if the bank manager doesn't think you'll be approved. Have you talked to a mortgage broker? We had a guy from mortgage choice come and chat to us at home (free) and he was awesome. Answered all our dumb questionsabout how loans work and helped us find the right bank to apply with for waht we wanted.
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have you tried a mortgage broker instead? apparently (according to my friend) they can lend more and they dont charge extra because they get commissions from the bank
My 2 cents would be going to a mortgage broker too first. They really help in getting you the best deal possible, and will know who will lend to you with the savings and budget that you have, and who won't, and what you will need etc, as well as answering any questions you have as well without thinking you are silly!They are experts in all that stuff. By going to one particular bank, they might try to encourage to take out a product like insurance etc that is not right for you....or you could be borrowing more at cheaper rates elsewhere.
A mortgage broker will be able to tell you if the bank you want to go with is a good idea or not....and most brokers like Mortgage Choice etc are free. And they won't think you are stupid for not knowing everything, that is what they are there for
For example a friend went to her bank to get her house refinanced into her name as she is seperating from her hubby, bank refused, she went to a broker and had 6 well known banks wanting her business at better rates than she was getting! She could have just walked away from that one bank thinking that was her lot...but This is where the broker comes in..
Best thing we did was use a Broker when we built this house (our first house), and we too had little savings at the time (although good incomes), and substantial credit card debt, and I thought he would laugh us out the door, but he was able to come up with a great mortgage for us by using grants available etc, and know what info banks will expect from us etc. It made the whole process so simple and unscary! After 4 years in our house, we have almost no other debt now (we have been able to afford to pay this off asap), and we pay almost about the same each week on our mortgage as it would cost us to rent a house like this.
Last edited by Faithful Mumma; January 25th, 2011 at 06:50 PM.
Secondly don't be afraid to shop around for a better deal AND if for some reason you get knocked back by the first back do try others, particularly mortgage brokers!
We got back the first time we went for a home loan, went to a different bank and they were practically falling over themselves trying to lend us money and WAY WAY more than we had asked for!
We went through a mortgage broker. We had a personal loan of about 5K and absolutely no savings at all. There are limited lenders for Family pledge loans- but our mortgage broker found one and with the family pledge we were able to borrow more than the cost of the property!
Take at least your 2 most recent payslips, any statements of debts or other accounts if they are with another bank. have a rough idea of the current value of your assets.
Your hecs debt shouldn't come into play at all really. If you were earning enough to have the deductions taken from your pay it would show on your payrolls and they would use your net income figures. Brokers are good to shop around, but personally I would rather go through the bank directly, they have better follow up service in my opinion
Our morgage broker has been awesome, they even sent us a list of current sales in the area last year over 2 yrs since we had bought the property and let us know that our fixed is up this year and they can help us negotiate a better rate. We have much more follow up from them than the bank we got the loan with.
Banks all seem to be using computer systems now, since the GFC the banks have been made to tighten up and they take everything into account and if the numbers don't add up on their computer they can't seem to help you. I would go with a broker too and see what they can offer, they do everything for you and it should take a bit of stress off you as you won't have to be dealing directly with the lender.
I would definitely recommend seeing a broker. They are there to play to your favour, not necessarily their own back pocket. Also take as much info as you can to back up your situation (eg, payslips, budget, even samples of ads for houses which interest you). Know what area you are keen to buy in & watch prices (not just list prices but sale prices also) as this could be a good indication of how much you will be able to borrow. Some banks will do up to a 97% lend with mortgage insurance if you can't find one to help with family pledge loan.
I know we borrowed 100% when we bought our first house about 5 years ago. From there we have stepped upwards, & more recently with the arrival of our DD downwards. Just remember it is only your first house, so try to think of it as a stepping stone.
I see you're north brisbane. Give me a PM if you would like a recommendation on brokers, I work for an Accounting firm & we have contacts in banks & broking. I'm on the sunny coast, but most are willing to travel & help out where they can.
I would still see the bank & just see what they have to say.....you might be pleasantly surprised. But yes, I agree with most above, the computer does the sums these days. If you're lucky you will land a good broker or lending officer & then you can keep going back to them forever more. Best of luck with it!
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Bank meeting - What to expect? And does my HECS debt make a big impact?
(having a sad right now BTW!).
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