Each week across the ACM network Ali and Gaby Rosenberg offer quick tips for big wins in understanding your money. The sisters are co-founders of the Blossom micro-investing app.
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Buying property can be thrilling and inspiring, but also bewildering, especially when you're applying for a home loan. Putting aside the eye watering numbers involved, the idea of someone scrutinising each and every random transaction on your bank account statement - from the Bunnings blow-out to Uber Eats on repeat - will have you quietly burying your dreams of property ownership back under the bed.
Never fear! One of our biggest motivations for starting the Blossom App was that we believe financial products are often unnecessarily complicated. They serve people who already understand and benefit from them, but it's not a great welcome for the new kids.
A mortgage application can be intimidating, but lenders won't judge you for your KFC cravings. Here's a handy guide to what a lender commonly looks for:
Clear, regular and reasonable saving
Lenders like to see that on balance, you could cover potential repayments comfortably. Showing them regular transfers directly from your transaction account to a dedicated savings account each month, in an amount that doesn't fluctuate, makes them feel really good. A useful rule of thumb is to have at least 6-12 months of healthy saving habits you can easily manage on an ongoing basis.
Don't give them credit
Buy Now Pay Later plans and credit cards may seem like a good way to manage every day cash flow, but lenders tend to consider the whole picture. BNPL is just money you owe, and owing money can make a lender feel nervous, so it's better to pause on those plans for now. When it comes to credit cards, even if you pay off your balance every month, or don't use your credit card at all, lenders may look at your credit limit, not your balance, as part of your total liabilities.
Looking at loans
Car loans or student loans aren't dealbreakers. Rather than the value of the loan itself, lenders tend to consider the amount of your regular repayments in context of your overall income. If you're making a solid salary each month, but using a big chunk of it to pay off the HiLux, consider renegotiating your monthly repayments or waiting until the loan is settled to make your application.
Like any challenge, doing your research will help build your confidence and avoid any surprises. Whatever stage you're at in your property journey, many banks and mortgage brokers are happy to book a preliminary chat, because your success is their business too. Face it bravely, and the end result is more likely to be a win for everyone involved.
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Sisters Ali & Gaby Rosenberg are the co-founders of Blossom App.
- Nothing in this article should be construed as being personal financial advice. It is general in nature only and has not taken into account your particular circumstances, objectives, financial situation or needs. You should consider whether the information, strategies and investments are appropriate and suitable for you or seek personal advice from a licensed financial planner before making an investment decision. Past performance does not indicate future performance. BlossomApp Pty Ltd (ABN 74 644 216 151) is a C.A.R. (No. 001284228) of Gleneagle Asset Management Ltd (AFSL 226199). Consider the PDS and TMD at blossomapp.com to ensure the product suits your needs.
- ACM co-owner Alex Waislitz has a stake in a company that provides services to Blossom. ACM is the publisher of this masthead.