According to a recent survey of 52,000 households, “40 per cent of home loan applications were rejected in December 2018” (Mortgage Business: Home loan rejection rate hits 40%, 21/01/2019). The cited article goes on to suggest that this is an increase of 32 per cent during the 12 months from December 2017! Staggering figures to say the least.
If you have recently had your home loan application, or someone you know has had their home loan application rejected by a bank, IT IS TIME TO CONTACT US.
The same study also revealed that authorised deposit-taking institutions… rejected just over 40 per cent of home loan applications, compared to 20 per cent rejected by non-banks.” This suggests that just because one lender says “No”, it doesn’t mean that all other lenders will agree. GET A SECOND OPINION.
Interest Only Repayments
If your loan has an Interest Only (IO) repayment period that is coming to an end shortly, you should consider that the new Principal & Interest (P&I) repayments will likely be 30 per cent to 40 per cent higher than the IO repayments. Will this increase pose a cash flow problem for you?
Interest Only can be a good cash flow management tool if your income is seasonal or if it is a part of an overall tax strategy as advised by your accountant (just a couple of examples). However, it means that you are not reducing your borrowed amount and may be eating into your equity, as well as paying more interest over the long-term if you are not making lump-sum or regular payments along the way. So it is prudent to eventually pay down your loans.
But, if you decide that you would like to extend your IO period, it may be a good idea to do so before it expires. Because these days, an IO extension requires a full application and as such you will need to fill in forms as well as gather the relevant information and documentation. WE CAN HELP YOU WITH THIS PROCESS.
Reserve Bank of Australia (RBA) data, as represented in the below graph, shows that approximately two-thirds of IO loans will have their IO period expiring by 2020. Therefore, it is wise to start preparing yourself for increased P&I repayments or preparing for an application to extend the IO period on your loans now, if your loans are affected.
RBA, Statement on Monetary Policy – May 2018
WE ARE HERE TO HELP. So feel free to reach out if you would like to discuss any aspect of the above in greater detail or would like us to help you in preparing your loan application.
Disclaimer: The information provided herein is for general information purposes only and does not constitute specific advice. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific advice should be obtained from a suitably qualified professional before adopting any investment/financial strategy.