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REIF's FAQ: Finance Edition Pt.2

Updated: May 20, 2022

Earlier this week we bought you some of our most FAQ's about the complicated world of finance. As finance specialists, we do understand that the terminology, ideologies and concepts that make up this intricate industry can be complicated.

We've decided to create a part two for REIF's FAQ: Finance Edition with a goal to help as many Aussies understand the common questions we're asked.

Q: What is LVR?

A: LVR stands for loan-to-value ratio. If you're buying a house, especially an investment property, lenders will use this term to determine the price percentage of the property you're looking to borrow. Banks will value the property you wish to purchase and how much you want to borrow. The loan-to-value ratio is therefore the percentage of the property price and how much you're looking to borrow from them. Generally, most banks will accept an LVR of 80%.

Q: How long do I need to have been in my current position before I can access finance for a home?

A: This is a common question that we get from a lot of our clients. There's no clear-cut answer as it's truly dependant on everyone's individual circumstances. Each lender also have their own requirements. For instance; we have some lenders on our panel who will give you access to finance with just one payslip, as long as you're full time. For casual workers, you can get access to finance, so long as you've been in the position for six months. However, we recommend consulting a REIF finance specialist to determine your circumstances so they can present you with a suitable lender who may be able to assist you with buying a house, sooner!

Q: What is a pre-approval?

A: When applying for finance, a pre-approval is basically a lenders way of confirming that they're willing to lend you money to purchase a home. While it's not final, it can allow you to enquire on a property with the confidence that they're willing to give you a certain amount to purchase that property. Pre-approvals can make the process of securing a home loan much easier.

Q: Is there a way to add someone to your home loan if you are refinancing?

A: The only way that you can add someone to your home loan if you're refinancing is if they're a spouse or partner. Basically, the lenders need to identify that their is a benefit to the other person by adding them to your home loan. If you want to learn more about this and are looking to refinance your mortgage, reach out and a finance specialist may be able to give you more guidance around this.

Q: How can I improve my chances of getting approved for a home loan?

A: There are various ways that you can improve your chances of getting bank approval for a home loan. While it's dependant on your circumstances, as a general rule of thumb, here are three of our biggest strategies that will increase your chances of approval. They are:

  1. Having consistent savings. You need to be able to show that you are able to save money on a regular and consistent basis.

  2. Having reasonable costs of living. This can be demonstrated through what is coming out of your account and being spent over a 30-90 day period. Lenders want to see that you're going to be able to afford your mortgage after your costs are accounted for.

  3. You're paying your bills on time. If banks see that you're more than 15 days late on paying your bills through assessing your credit file, it reduces your ability of being approved for a home loan.

Other Questions?

If you have finance related questions that you would like us to answer, reach out. We have a range of experts with decades of combined experience to assist you. Alternatively, if you're looking to book an appointment with a Real Estate Investment Finance Specialist to review your current finances, click the button below.

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