Browse Forums Home Finance 1 Aug 01, 2011 12:24 pm Hi All, We are close to having our new block of land settle in around 2mths time. Combined we are on an income of around $175000 Net. We'll be borrowing around $500,000, and we've done a really thorough budget and know we can easily afford the repayments without too much troubles. My only concern is that in our younger years (not so long ago) we were not so smart with our finances, and have around $40000 in unsecured debt (2x Credit Cards and 2x Personal Loans). We have no defaults, and have never missed a payment. When we go for the loan, we'll have around $80,000 in genuine savings. We're easily saving $7500p/m at the moment. How much of an impact is the unsecured debt likely to have? We've never had a home loan before, and don't currently own property. Would it be better for us to pay down a good proportion of the debt (say pay off 1 card and 1 loan), and go with a smaller deposit/savings, or is the higher savings amount better? Re: Loan approval with high % unsecured debt? 2Aug 01, 2011 2:40 pm if anything it probably makes your case stronger. Having done finance app in my past career, people who had small loans but made proper payments showed the finance company they can commit. Re: Loan approval with high % unsecured debt? 3Aug 01, 2011 3:50 pm I just got approved for around the same amount with a $30k personal loan for a car... as long as you can prove you have been paying it off without missing one payment you should be fine. http://lindeman28.blogspot.com - Our building blog Re: Loan approval with high % unsecured debt? 4Aug 01, 2011 4:43 pm Lenders calculate what they believe you can afford in loan repayments and set a maximum loan size based on that. Generally speaking, the main bits of the calculation are : Your gross (in pocket after tax) income minus :
If you can manage it (and not go over the maximum loan-to-value ration your lender will accept) you should consider rolling your credit card and personal loan into the home loan, and close (or reduce the limit on) the cc accounts. Home loan interest rates are much lower than credit cards. Whatever your current repayments are for the unsecured/cc loans, use that saving to increase your home loan payment. Re: Loan approval with high % unsecured debt? 5Aug 04, 2011 5:05 pm You should be fine. A lot of unsecured debt can affect your credit scoring (at the lenders that use credit scoring) but it looks like you have other factors in your favour such as strong serviceability and a decent amount of savings. I wouldn't think you would have any problems. Cheers Patrick Patrick O'Brien Re: Loan approval with high % unsecured debt? 6Aug 08, 2011 5:52 pm Hi, Firstly your land settles in 2 month time + contract signed and you havn't gotten a unconditional approval from lender yet??? - you better start getting cracking. To answer your questions- it's better to have a lower debt then savings; it's ok to go for a loan with min savings 10% normally for most vacant land. Regards Michael Sika Hi All, We are close to having our new block of land settle in around 2mths time. Combined we are on an income of around $175000 Net. We'll be borrowing around $500,000, and we've done a really thorough budget and know we can easily afford the repayments without too much troubles. My only concern is that in our younger years (not so long ago) we were not so smart with our finances, and have around $40000 in unsecured debt (2x Credit Cards and 2x Personal Loans). We have no defaults, and have never missed a payment. When we go for the loan, we'll have around $80,000 in genuine savings. We're easily saving $7500p/m at the moment. How much of an impact is the unsecured debt likely to have? We've never had a home loan before, and don't currently own property. Would it be better for us to pay down a good proportion of the debt (say pay off 1 card and 1 loan), and go with a smaller deposit/savings, or is the higher savings amount better? Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19096 It will be neat but you won't have much freeboard. At least they are not weep holes. Are you in a high intensity rainfall region? The regulatory slope is only required… 3 8264 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). Would require a mini… 13 39685 |