The latest figures from respected property analysis company CoreLogic show the Australian property market is heating up with prices set to hit new records this year.
Fuelled by increased demand for home and dwindling supply it means banks are going to hold all the aces when it comes to loan approvals according to leading Australian consumer and finance law firm MyCRA Lawyers.
Core Logic believes 2020 will see the latest market recovery on record lead primarily by owner-occupiers wanting to buy homes.
The market bottomed out in June last year down 8.4% but has already recovered 6.7% according to CoreLogic’s figures which is pointing towards record prices in the coming months and homebuyers facing stiff competition.
MyCRA Lawyer CEO Graham Doessel said most homebuyers think its all about a deposit and whether that be 10 or 20 percent or even more, but that’s only half the story to securing a competitive home loan.
“With supply tight and demand increasing for homes, banks are going to start getting extremely fussy about who they will (or won’t) lend to, just like markets can be deemed a vendor or buyer’s market same to goes for the lending market, and we are entering a lender’s market,” Mr Doessel said.”A lot [of people] are going to find they get rejected for a loan or have to pay higher interest simply because they have a ‘less than perfect’ credit file.
“Some of the things that can affect your credit score include, using buy now pay later services, having late credit card and other loan repayment, and even worse, getting a default on your credit file because you didn’t pay a bill,” Mr Doessel said.
“A lot of people have no idea they even have bad credit score, because they don’t realise every credit enquiry shows up on your credit report, or they don’t realise they have a default for not paying a missed bill because they moved house,” Mr Doessel said.
“Many of these defaults and blemishes that drag your score down can be removed and it is just as important to have a healthy credit score as it is to have a healthy deposit.
“Your credit score is a number out of 1200, and will initially be influenced by the suburb you live in, and your employment history, but what will really deduct points from your score is your financial habits like late payments, credit enquiries, defaults, court judgments and RHI (Repayment History Information), many of which can be removed from your file to boost your score,” Mr Doessel said.
The easiest way to be forewarned is to check your credit file at https://www.FreeCreditRating.
“Often people won’t be hit with the bad news that they have to pay higher interest for their home loan till after they have bought a home at auction and go to the bank to settle the sale. That’s when the lender will raise issues with someone’s credit file and look to charge them higher interest, or reject the loan completely,” Mr Doessel said.
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