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My husband and I had applied for a construction + building loan with Westpac and they have rejected it on the basis that we have no savings.
We are currently paying off our car loan.and around 25k is remaining.We are both in APS jobs and earning ok. I started my job last month, before that I was working with Westpac. We've taken personal loans before on 3-5 year terms and paid them off within 10 months each time. We are excellent at paying off loans but not very good at saving. We did have a few big expenses since jan like the creche taking$1760 in deposit.According to our calculations after moving out of Yarralumla,we'll easily pay off the monthly installments and still have cash left. We had to move to Yarralumla as we had just moved from Perth and needed a roof over our head asap.
We paid 10% on our land last year which was $17,500 and our land will be ready for handover soon.
We are really worried about what we'll do. Should we contacting a broker? other banks? who do we turn to now. I think, my husband can get around $15000 interest free laon from work.That wud be used to pay off the car loan. What else can we do besides savings....after the creche,rent and car loan we still have savings but our bank statement didnt look so good coz of the $1760 deposit and us paying $105 a day in creche+childcare fee.After the quarterly, CCB payment,our bank looks healthier than before. I think I'm chasing my tail now! just very worried...please advise!
Sorry to hear about this. My advice would be to talk to a broker as they have a lot more loans available and know more about what the banks are looking for with regards to savings and loan servicability.
I would definitely get a broker to help. The broker is on your side (they get the commission if you get the loan), but the bank is on the bank's side. The bank wants to keep you in the dark about what their criteria are so you can't game the system.
Thanx guys! We'll call Mortgage Choice today... Hopefully, they'll have a solution.
Or even try Refund Homeloans as you get some of the commission money back
May i ask what % of property value will you be putting in, you mentioned you put in 10% of land already.
I wonder if that may have made a difference.
I read somewhere that you don't need to have a saving history as long as you have over 20%.
sorry they are iving u such a hard time. may be you should try to save even if is 10 grand. at least its better than nothing
We currently have our land loan through ANZ and were recommended Westpac to refinance and get our construction loan, but they wouldn't even look at us because we weren't Westpac customers. Oh well, hopefully ANZ say yes so we can get started
@Novotel....does the FHOG count as a part of the deposit? The HFm at westpac said that it does and my husband will get $10000 from work towards it... so $17500+21000+10000=$48500. We're also getting a loan from work to pay off $15000 towards the car loan.We'll also reduce our credit card limit by $5000. hopefully all this will help.
@lj3376 We're also going to CBA and ANZ next.
@JohnandTarin...we spend only the bare minimum...it will be very difficult for us to save a significant amount... thanx to the rent at yarralumla and the creche fee!Even if we could save a substantial amount in the next few months, we still need to pay the remaining 90%of our land value!
[quote="Moodyfish"]@Novotel....does the FHOG count as a part of the deposit? The HFm at westpac said that it does and my husband will get $10000 from work towards it... so $17500+21000+10000=$48500. We're also getting a loan from work to pay off $15000 towards the car loan.We'll also reduce our credit card limit by $5000. hopefully all this will help.
/quote]
It didn't say about FHOG count as part of deposit. I guess technically it can be.
ANZ has been pretty spot on with a friend of mine in WA.
Everything took less than a month, of course it was not a FHO but still they were pretty quick.
I hope it does....it's all so exhausting..and to think that we haven't even started building yet!
It didn't say about FHOG count as part of deposit. I guess technically it can be.
This depends on the lender in question. There is no standard rule.
However, you should check the mandatory genuine savings requirement of most lenders if you do not have 20% deposit.
How much savings do they need to see? We have paid off personal loans within 10-12 months...that would have been a saving had we not chosen to take the P/Ls.
there's no way we could collect the 20% which is $90,000.And our combined income is over $115000. I don't know what we'll do if they'd insist on the 20%!
Hmmm I'd use all your cash towards the purchase rather than towards paying off the personal loans, if you can afford it of course.
Most lenders require that you have 5% in genuine savings which means money saved in an account over a minimum of 3 months. Bonuses or the government grant may count towards your deposit but not towards genuine savings.
Instead you should consider a lender that can lend 95% or 90% with no genuine savings required. They are quite strict, requiring you to have a good income, ideally be paying rent now and have a good record of paying off past debts. Based on that it looks like you qualify.
FYI there are very few lenders left that can lend 95% with no genuine savings and only a handful more that can lend 90% with no genuine savings. The other option is for your parents to guarantee your loan using their property. If you do that then you can borrow 100% without paying LMI and genuine savings are not required. This solution isn't suitable to everyone of course, but we are finding it increasingly more popular.
That's a good point from jb_money and something I'd considered too. You can actually take on debt to build a deposit, as long as you can get that debt at reasonable rates. If you use money you would have put toward your car loan for your deposit, then you are in effect using your car as security for the house loan, but in a convenient way. And if you can get promotional rates on credit card debt (like a 0% interest transfer) then even unsecured debt like that could go into your deposit without cost an arm and a leg.
You just need to be sure your monthly surplus is still sufficient for the mortgage payments.
Basically you are trading monthly income (which you have more of but may not need all of it) for deposit (which you need more of). You will end up worse off financially from this kind of arrangement because you are probably paying higher rates on that debt than your mortgage, but that's the price of getting the house NOW! And if it lets you get the FHOG before it disappears, that may make up for the extra cost.
That wouldn't work at all. You can't borrow to put together a deposit any more, even if you try to hide the debt it will be discovered. The days of liberal lending have long gone and the government's new promised legislation to cover consumer lending has truly put lenders on notice.
There is a reason for the savings requirement. That is you prove to the lender that you have capacity to save and responsibly handle debt. If you borrow money to use as deposit, you are missing the point the lenders are making. "But I can afford all the repayments" argument doesn't work with mortgage insurers.
Not many will publicly admit that ngative credit scoring is already here and heavily used. Those applicants who change addresses every 1-2 years, make 2-3 finance applications per year and already have personal loans score low when applying for a high LVR home loan especially if they are first home buyers.
It doesn't matter what lenders say in their advertising, if your assets do not outweigh liabilities, forget about applying for a home loan these days.
We earn about $6200 per month and our car loan repayment is only $430.It's the childcare that's making a hole in our pocket but we get 50% back every quarter. I've just started this job a month back and so our bank statement looks healthier now but didn't earlier.... It's the land handover due next month that bothers us!
How did you go with the broker?
Thanx for asking Hels....we meet with the broker on Monday.
But in the meanwhile we spoke to Defcredit and they're very positive about it but said the only problem would be with the fact that I'm on probation for another 2 months. Just spoke to the director of my section and she said that she was happy to give a letter saying that it was highly unlikely that I'd not be made permanent.In my first appraisal,I've done very well... I hope that'd help somehow!