6 Common Borrowing Concerns

Thinking about buying a home or investment but worried you won't qualify? You're not alone. We talk to people every day who feel unsure about where they stand with lenders in today’s climate and most of the time, it's not as bad as they think.

Worried You Won't Qualify for a Home Loan?

Here’s 6 common fears we hear a lot, and how to turn them around. If any of these hit home with you, reach out or have a play with the calculator on our website to check your position. We're here to help you feel confident and ready.

1.       DO I HAVE ENOUGH DEPOSIT?

You don't always need 20%. Some lenders accept 5%, and there are even deposit assistance schemes or LMI (Lenders Mortgage Insurance) waivers available for eligible professionals.

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2.       IS MY SPENDING TOO MESSY?

Lenders will and do look at your bank statements. A few Uber Eats or subscriptions aren't deal breakers, but they do want to see consistent, sensible spending.

Here's why:

• VERIFICATION OF LIVING EXPENSES - Since the introduction of the more rigorous responsible lending rules, lenders may want to see your actual spending behaviour, not just what you say you spend. Bank statements give them the clearest view.

• CONSISTENCY CHECK - Lenders may compare bank transactions against declared income, rent, debts, and lifestyle to make sure everything aligns. Discrepancies (like undeclared personal loans or gambling)are red flags.

• GENUINE SAVINGS - For first home buyers especially, lenders want to see a pattern of regular saving over time, which they may confirm through statements.

• AFFORDABILITY AND CONDUCT - Lenders also assess how well you manage your money. Overdrawn accounts, dishonours, or payday lender activity can definitely weaken an application.

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3.       I'M SELF-EMPLOYED OR A CASUAL. CAN I STILL GET A LOAN?

Yes, it's possible. You'll usually need to show income over 2 years if you’re self employed and over 6 months if you’re casual. But lender policies vary heapshere, so that’s where we come in and can compare different lenders based on your particular situation.  Here’s the top 4 hazards a lender may be wary of are:

‍INCONSISTENT OR UNVERIFIABLE INCOME

Hazard … Stability is key here, if your income fluctuates wildly month to month, or you can’t show at least 18 to 24 months of financials (for self-employed), or consistent stable hours over 6–12 months (for casuals), you’ll hit a big brick wall.

What Could You Do:

o   Self-employed: Keep tax returns up to date and avoid big drops in net profit year to year.

o   Casual: Ensure you’ve been with the same employer for ideally 6+ months

LOW DECLARED INCOME ON TAX RETURNS

Hazard … Self-employed quite often reduce taxable income for tax efficiency which is totally fair… But lenders go off what’s on paper,not what’s “really in your pocket.” This kills your borrowing power.

What Could You Do:

o   If you are planning to apply in the next 6–12 months, ease off aggressive deductions (i.e large vehicle expenses, home office, depreciable asset purchases etc.)

o   Speak with an accountant who understands the whys and why nots!

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POOR BANK ACCOUNT CONDUCT

Hazard … Lenders closely check for overdrawn accounts,dishonours, late ATO payments, personal debts, or “irregular income flow.” This is especially critical for self-employed or casuals, who are already viewed as higher risk.

What Could You Do:

o   Keep personal and business accounts clean and separate.

o   Run your accounts optimally for at least 3-6 months as if a lender is watching you, because they very well might be!

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‍NOT HAVING THE RIGHT DOCUMENTS

Hazard … You might be earning well, but if you don’t have the right paperwork to prove that, like up-to-date tax returns, Notice of Assessment (NOA), BAS, and /or accountant's letters, the lenders won’t even look at your application.

What Could You Do:

o  Get your documents in order early

o  Self-employed: Last 2 years tax returns + NOAs, 2 years financials (orAlt Doc alternatives).

o  Casual: at the very least, 3–6 months of consistent work and the two most recent payslips showing solid hours worked  

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Bonus Tip:

Alot of lenders treat casual and self-employed applicants differently, so lender choice matters massively. Some lenders will only take 80% of your income, some are cool with Alt Doc (i.e.don’t need tax returns and financials), and others want 2 years of squeaky-clean returns.  This is where having the right broker [ahem, yes us] helping you is ultra important!  It’s super hard coming back from a lender decline, so why get one in the first place!

4.      IS MY CREDIT SCORE TOO LOW?

A credit check is part of the process, usually done by your broker and by the lender. They do look at more than just your number. But let’s be honest, a good credit score certainly helps!  At the end of the day it is about your full financial picture. Our top 2 fastest impact tips to cleanup your credit score when time is of the essence are:

1. PAY DOWN (OR IDEALLY AVOID) BUY NOW PAY LATER FACILITIES - Why it works fast:

Enquiries on your credit file from Buy Now Pay Later (BNPL) will drag your score down.

‍What Could You Do:

o  If you can, pay off and close unused Credit Cards or any BNPL (like Afterpay or Zippay etc) as these are open lines of credit and can hurt your borrowing capacity even if there’s nothing owing!

o  Avoid making just the minimum repayments

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2. CHECK YOUR CREDIT FILE AND FIX ERRORS OR LATE PAYMENTS - Why it works fast:

It’s surprisingly common to have old or incorrect listings (especially defaults or missed payments that were paid but never updated), these may just be sitting on yourfile doing nothing but bringing your score down, fixing them can cause a decent score bump, sometimes within as little as 30 days.

What Could You Do:

o  Get a free credit report or ask your broker to get one on your behalf

o  Check for outdated, incorrect information/payments or accounts that should be closed and fix it.  

o  You have every right to dispute these with the credit provider directly and through the reporting agency.

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Bonus Tip:

If there was a late payment, ask the creditor for a “goodwill deletion” or to correct it, especially if it was a one-off error and you're a long-term customer!

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5.      AM I TOO YOUNG TO BUY A HOME?

Nope! You don't need to wait until your 30s. If your income and savings stack up so long as you’re over 18, age isn't a blocker - there's massive support available for first-home buyers too.

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6.      AM I TOO OLD TO GET A MORTGAGE?

NO WAY! Being over 50 doesn't rule you out. In fact quite often you can be in a way better position than you thought you were!  Lenders just want to see how you'll manage mortgage repayments later in life, it's about strategy,not just your age.

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Still Have Questions About Getting Approved?

Book a time and we can help you figure out the right moves for you.

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