Vicky McLoughlin No Comments

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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Vicky McLoughlin No Comments

Credit Card Debt & Balance Transfers

Australia’s national credit card debt is $32 billion and rising (Reserve Bank of Australia, May 2018).

It’s understandable that people find themselves struggling to pay off their credit card balance when there are so many enticing offers out there encouraging people to have just one more card.

Many people take advantage of credit cards that offer reward points or frequent flyer miles. These types of cards can be considered a useful resource, however it’s important to realise that interest rates could be as high as 17.99% & if you don’t pay off your bill in full each month your interest charges could become expensive.

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