mortgage lending

[The Standalofts]

Hi all

We are hoping to move to Adelaide before the start of next year. I have spent a lot of time researching wages, rentals etc to work out our funds. Our dream was to come out mortgage free, but with the poor UK property market and increased value of houses in SA we know this is unachievable.

Not sure if anyone can answer this or not, as I know each lender will be different. But was wondering if anyone could advise us on basic rules of lending e.g. in the UK most banks require you to have been a UK resident for 6 months, in employment for 6 months etc. We just want to have a rough idea of how long we need to look at renting for.

Lesley

[kangomik]

You need to speak to your bank as soon as you get here.
Everyone is different.
I had a mortgage off with only having a letter of acceptance = no work, no work history in Aus.
The mortgage wasn't great but i was blown away.
After 6 months of work we looked at this again, the figure given (on PR visa) was quite simply insane.

At the end of the day, the bank know what you have saved, what you are spending, and what you have as an income. the longer you leave this will either go in or against your favour.

[Andrew Williams]

In terms of how long you need to have been in employment, that will depend on your individual situation.

However if someone secures employment and has been in their occupation/industry for 2 or more continuous years they will be considered immediately, also if a person has a strong deposit they will be in a much better position.

Employers in Australia generally put people on probabtion when they start work for 3 or 6 months, this can limit the lenders that will consider you but there are lenders out there that will accept this.

It doesn't make too much difference how long you have been resident however temporary residents are restricted to max borrowing of 80%

The way that lending amounts are considered is based on a person's/couples net monthly income less living expenses. The lenders then apply a cost of living amount to deduct based on how many in the household, once the remaining income is ascertained this is the amount servicing the loan is based on.

If there are any liabilities ie loans, credit cards (the actual limits are used even if no balance is outstanding) these are also deducted as a monthly expense.

The next step is to take the Banks interest rate, then add a buffer of around 1%-1.5%, this then determines the allowable borrowing amount (so a bit more complex then the UK, lol).

Hope this helps.

Andy

[kangomik]

Just to add to that, in my experience, having a higher credit limit here = bigger credit card limit, works against you on the mortgage front. In the UK I was encouraged to increase my credit rating, I could have more in credit cards than the value of the house, over here it's different.

What i do find funny, and i welcome correction. Intrest earned on money saved is classed as an income, yet some of this money if not most of it is used as a deposit, so this source of income is then lost. So your income to gain a mortgage is not worked out too correctly, and this amount can catch you out.

You need some clever advice from people in the know, don't just listen to a bank. afterall it's there job to sell debt.

[The Standalofts]

Thanks for the info it’s a great help to us – realise it can be a bit like asking how long a bit of string is, but it’s helped my get my head round it.

Lesley