The purpose of loan applications is solely to establish your eligibility and to assure the lender that you would pay back, with interest and on time. Hence, only two things matter in loan applications: your financial health and personal profile.

• Financial health pertains to present income, assets or savings you have, financial liability and source of income or employment history. The income determines how much you can spend and your financial liabilities will determine how much you can save or have to spare. The loan amount you are applying for will be repaid in instalments, which would most likely be monthly. The lender will check if you can afford to pay that instalment every month. The general approach is deducting all existing financial liabilities including monthly expenses from the income. The result should be considerably higher than the instalment that must be re-paid.
• Source of income and employment history will be quintessential factors as that would tell the lender if an applicant has a steady income and if one has been employed long enough to consider it as a secured job or profession. Lenders are not concerned about your entire professional future. They just want to be reassured that you wouldn’t be out of job or be unable to repay the loan because of fluctuating income. If you are self-employed or have a business, then the history of your self-employment or history will be considered.
• Both financial health and personal profile are assessed relatively. The type of loan you are opting for, the loan amount you apply for, the purpose of the loan, term and the instalments that you would have to bear will be kept under consideration while assessing your financial health and personal profile. The personal profile includes everything from your professional experience to your academic qualification. Not all lenders ask for these details but high loan amounts will call for increased scrutiny.
• Your credit score will be the next checkpoint, followed by savings and investments. Your existing liabilities or loans will also be considered. Credit score obviously tells a lender if you have re-paid your past loans or have been good at repayment. Savings and investments will assure the lender that the applicant is bankable. Existing loans and other liabilities will tell the lender if you will be able to manage an additional financial obligation.

 

Lenders look for clarity, accurate details, truthful declarations and honest conversations.

There are some expenses that require a loan. Borrowing money does not have to be a bad thing, but you do need to be responsible. There are instances when borrowing money is a necessity. If you are looking to make a major purchase like a home or car, it is often unavoidable. Before you borrow money for any type of purchase, it is important that you know how to be a smart borrower. Here are the best tips for borrowing smarter:

 

Check Your Credit

It is important that you prepare before you borrow. This means that you need to check to make sure that you have a good credit score before you think about borrowing money. Having a better credit score will give you access to a lower interest rate on the money that you borrow. This means that you can borrow money for much less if you have a good credit score/ You might want to put off borrowing money until you get a higher credit rating.

 

Borrowing Can be Good

Many people assume that borrowing money is always a bad thing, but this is not the case at all. It is possible to borrow money in a way that actually benefits you. For example, if you choose to borrow money to buy a home and the value of the home increases with time, you made a wise investment and had the ability to leverage the debt to increase your own net worth. This is something that makes the most sense and is the best way to build your net worth. This means that borrowing money can sometimes be a good thing if you make the best decisions.

 

Budget

It is also important for you to budget when you are borrowing money. This is something that you need to be sure to do. It is important that you have the ability to make the monthly payments that are required for the money that you borrowed. It is even a good idea to have extra money saved so you can pay off the loan at a faster rate. You will need to create a budget so that you know how much you need to save and how much you have available to spend. This is one of the best ways to make sure that the money your borrowed does not impact your credit rating in a negative way at all.

Refinancing a mortgage can be very rewarding or it can be a loss incurring exercise. Every financial decision or a financial product/service has potential pros and cons. You need to weigh the pros and cons in the right context and then make an informed decision.

While the entire spectrum of refinancing cannot be discussed in just one article, this beginner’s guide should shed some light on the essential aspects.

What is Refinancing?

Simply put, refinancing is opting for a new loan to replace your existing loan. You could do this with the same lender or with a different lender. Refinancing has some potential benefits. For instance, you can opt for a lower rate of interest than the one you are paying now, you could reduce your monthly instalments as a result or you can keep paying the same instalment and end up paying the entire loan sooner than with the existing loan. Also, you can save some money upfront by getting a cash payment because of the lower rate of interest while you stick to the same remaining repayment term and instalment. The objective is to save money using the lower rate of interest or a more favourable lender.

Overcoming the Issues with Refinancing!

Any financial product or service must be studied well to make informed decisions. There will be lenders, their representatives and brokers who would want to sell you the concept of refinancing. That is one way how they acquire new clients and earn commissions. You need to study the pros and cons.

There could be some upfront costs on your part, in the form of fees and commissions or processing charges. These shouldn’t deter you if you are actually making some savings every month and then eventually end up with substantial returns.

You need to factor in the short term and the long term goal. If there is a lower rate of interest, then you obviously have a bad mortgage and you should get the better rate or switch to another lender. But, if the rates have very little difference and don’t really affect the bottom line and if you are paying substantial amounts to make the switch, you have to do the math to make sense of refinancing in the short and long term.

Above all, you should always put refinancing in the right context. Would you be staying at the same home for five years or more, which is when you would realize the substantial benefits of refinancing? Do you need a better mortgage so you can sell your property immediately? These are certain contextual questions that beg consideration.

We always recommend that you consult with your YFG lending specialist to be able to make an informed decision.

 

One of the biggest purchases that you will make in your lifetime is a home. This means that you will likely have to finance the purchase of a home with a mortgage loan. One of the things that you have to understand about mortgage loans is that they come attached with interest rates that can sometimes increase over time.

Since the life of a mortgage loan is so long, the amount that you are paying in interest alone is substantial. Refinancing your mortgage loan can be a great way for you to get access to lower interest rates and to get access to cash that you might need to maintain your home.

Before you consider refinancing your mortgage loan, it is important for you to know when the ideal time is to do so. Also, we recommend speaking to your YFG lending specialist to help guide you through this process.

Here are some of the most important things to consider when you are deciding when to refinance a mortgage loan:

Has Your Credit Score Gone Up?

Your credit score does matter when you are trying to refinance your mortgage loan. This means that you often want to wait to refinance your home until your credit score has had enough time to improve. You will get access to the lowest interest rates if your credit score has gotten better since you first obtained your mortgage loan. Taking a look at your credit report will allow you to see just how much your credit score has improved and if you will actually be able to get access to a much lower interest rate when you refinance your mortgage loan.

Debts Have Been Paid

If you have paid off some other debts since you first got your mortgage, it might also be a good time to consider refinancing. You might have paid off a car loan or student debt since you first obtained your mortgage loan. This means that your debt to income ratio has improved over time. This will help you get a much lower interest rate on your mortgage when you refinance the loan. As long as you have paid off some debt, it won't hurt to look into refinancing and see if it is the right option for you.

Fixed Rate

You might also decide that you want access to a fixed rate mortgage loan instead of variable. If you are looking for more stability, you can choose to refinance for a fixed rate that stays the same.

As you consider the possibility of applying for a loan or for credit, you are inevitably going to want to know about your credit score. This is fair enough, since your credit score is going to play a keen role in the types of loans or credit that are made available to you.

In the end, it is important to understand why it is so important to know your credit score.

Knowing Your Credit Score

Living in Australia, you have access to your credit score or rating. Furthermore, you also have access to your credit file. At the same time, it is important to keep in mind that potential lenders also have access to these facts and materials, and review such information on application of new loans.

Credit files are created when you apply for things like credit cards, loans, or mobile phone plans. A credit file, which is also known as a credit report, can prove to be a highly valuable element to your desire to obtain credit or a loan. Overdue debts, any default, and credit applications are just a few of the things that will make up your credit report/file.

You can expect a lender or provider to make an enquiry to a credit bureau. One example of such a bureau is Veda, which will maintain a record of an enquiry such as this. Once they have your credit file/report on hand, they will be able to determine if you are the type of person to whom they can extend a loan or line of credit. Their own criteria will be utilized, in terms of determining whether or not you qualify for a loan. A score might be used during your application assessment.

Understanding your income and all of your expenses will help you to understand how much you can borrow. You may want to strongly consider paying down your existing debt, prior to applying for a loan or line of credit. This can be a particularly useful avenue for those who are concerned that their current debt might keep them from securing the financing they require.

If you are concerned about how your financial information is being handled, keep in mind that your documents are protected under the Privacy Act 1988. Credit reporting bodies and credit providers are required to adhere to the regulations under this act to the absolute letter.

Understanding your credit score is vital. This is even true for those who have no desire to go through the process of securing a loan.

The path to securing your loan or credit can seem like an enormously challenging one. This is particularly true for those who have never applied for a loan/credit before. When you consider the list of types of interest rates alone, it’s easy to become a little frustrated.

Nonetheless, the more you understand now, the easier the loan process will be for you. This thought can certainly be extended towards the different types of interest rates that are available to you. But remember – your YFG Lending Specialist is there to help you navigate through all of the options and find the best one for you!

Which Interest Rate Is Right For Me?

Regardless of the interest rate you choose, it’s important to understand that interest rates are responsible for determining how much your loan is going to cost you. It will also determine what you are required to repay each month. The slightest difference to interest rates can play a significant role in how your repayments are determined.

With that thought in mind, here are the different types of interest rates you are going to come across:

• Principle and Interest (P&I): With this interest type, the loan payment will cover your interest charge, in addition to a portion of your original loan amount. This will reduce your loan balance, over the course of the life of your loan.
• Interest Only: You’re going to agree to pay your interest charges for an agreed upon period of time. This is usually five years. With most loans, you’re going to find yourself reverting to P&I after a certain period.
• Variable Home Loans: You’ll note that the interest rate charged will move up and down in sync with various indicators, generally your Reverse Bank Cash Rate. If this rate increases, you can expect increases to the home loan rate by roughly the same amount.
• Fixed Interest Rate Home Loans: This loan type is going to lock you into an interest rate for a specific period of time. This period is generally anywhere between one to five years, although some people pursue options that allow the period to extend.
• Partially-Fixed Rate: Also known as a split loan, this option will allow you to pay a fixed rate for a certain portion of time, followed by a variable rate for the rest of the life of your loan.
• Introductory Rates: Also known as honeymoon rates, an introductory rate generally involves a lender giving you low interest rates for the first year or two of your loan.

 

These are the main loan types that you are going to need to learn more about. As always we recommend speaking to your YFG Lending specialist.

Through YFG Lending, you will have the opportunity to secure the application form you require. In the end, you want to make sure that when you are applying for a loan, you are going to go to a reliable source. At the same time, you also want to make sure that you are fully aware of what you are doing, as well as what is going to be required of you. These are a few things to keep in mind.

In terms of getting the loan you want, there are several things you are going to need to do, in order to succeed at getting exactly what you require.

How To Get The Loan You Need

The loan application experience can be different for everyone. Perhaps you are seeking a loan for your first home, or you are looking to refinance your current home loan, or maybe you are interested in obtaining an investment property.

The first thing you will want to do is determine the loan amount you require. You don’t want to borrow too much, and you certainly don’t want to borrow too little. Figure out how much you can comfortably stand to borrow.

Knowing the purpose of the loan can also go a long way towards helping you to find a loan with terms and values that are right for you. You will certainly need to work out your loan type, as well. This is going to involve looking at such possibilities as fixed mortgage loan, variable mortgage loans, a low doc loan, or an introductory rate. – but the Specialist lending consultants at YFG Lending can assist you with this detail, knowing the ins and outs of each!

It is also key to know what lenders are looking for in borrowers. Many of the top lenders are looking for individuals between the ages thirty and forty-five. Another strong selling point is if you have strong residential histories, have maintained a job for more than a couple of years, and enjoy a strong, consistent base salary. Just remember! - proof of income will be one part of your loan process.

If you are a new customer to the lending avenue you have chosen, you may need to bring some additional documents with you. These documents can include passports, Australian driver/firearm license, and your proof of age card. Additional documents might be required, and there are certain substitutions allowed, as well.

Make sure you study up on the loan features that will define each of your loan packages, but be sure to consult your YFG Lending Specialist lending consultant today!