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What Types of Debt Can Impact You Getting a Home Loan?

When applying for a home loan, part of the assessment process includes what is generally called a “serviceability assessment”. In other words, it’s a way of testing how much you can afford based on your income and minus expenses.

Part of the expense category will include debts (also known as liabilities). Not all debts are equal and when it comes to buying a house, some debts can be helpful and some not so much!

Most lender serviceability assessments require a positive net income position (also known as surplus income) and many lenders also have DTI (debt to income) benchmarks which need to be met.

Below is a summary of some common types of debt you will need to declare to your Mortgage Broker and how they might affect your home loan borrowing capacity.

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How to Make the Most of the Equity in Your Home or Property

As mentioned in our previous blog, owning property is one of the most effective ways of building wealth. The real value of your home lies in the equity raised and when you have raised enough equity, you have the option to access it. Here are our top ways to make the most of the equity in your home.

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What is Equity in a Home?

There are more perks to homeownership than just being your own landlord – home equity is one of them.

Owning property is widely considered to be one of the most effective ways of building wealth. Yes, the property is the asset, but the real value of your home lies in the equity raised. Equity is essentially the part of the home that you own, which increases as you pay off your home loan.

When you have raised enough equity, you have the option to access it. From renovating your property, to buying an investment to buying into the stock market – the world is your oyster, and your home equity is the pearl.

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Why Refinance Your Home Loan Now?

2021 is proving to be a record time for refinancing home loans in Australia. The ongoing Covid-19 lockdowns, resulting in more time at home together, have given people the opportunity to think and talk about their finances, with historically low interest rates being cited as major contributing factors to this trend.

The Seek Financial team have put together a short list of things to consider when thinking about refinancing your home loan, together with a few additional points to take into consideration during 2021.

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Loan Value Ratio – the key ingredient to understanding your borrowing capacity

Loan Value Ratio (LVR), can sometimes be confusing to home buyers, especially new buyers as they enter the property market for the first time. It’s very important to have a clear understanding from the start of what LVR means and what it provides in respect to your borrowing capacity.

The Seek Financial team have put together information that will hopefully give you a clearer understanding about what LVR is, how it’s calculated and why it’s so important in your quest to buy property.

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