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How to quickly improve your credit score

 

If you’re applying for any kind of finance (home loan, investment loan, car loan, personal loan etc), ensuring you have a good credit score is one of the most important steps. Your credit score is a track record of how you manage debts. While it can be negatively impacted by late repayments, the good news is that it can also be improved by doing the right things. Here are some ways to turn your credit score around.

 

✅ Pay bills on time
Late payments can significantly dent your credit score. To improve it, ensure you pay all your bills punctually. This includes credit card bills, loan repayments, and utility bills. Setting up automatic payments or reminders can help you stay on top of due dates and avoid late fees, thereby safeguarding your credit score from unnecessary harm.

 

✅Don’t use all your credit
It’s your job to show lenders that you’re responsible with credit. Another way to do this is to not use up all the credit you have available to you. If your credit card balances are high, consider paying them down or spreading them across multiple cards to lower the overall utilisation ratio and potentially boost your score.

 

✅Correct errors on your credit report
Regularly review your credit report for inaccuracies or discrepancies. Mistakes such as accounts that don’t belong to you or incorrect payment statuses can harm your credit score. If you spot any errors, dispute them with the credit reporting body to have them corrected. Addressing these inaccuracies can lead to a fast improvement in your credit score.

 

✅Limit new credit applications
Each time you apply for new credit, it leaves a mark on your credit report. Multiple applications within a short period can be viewed negatively by lenders and may lower your credit score. Try to hold back from unnecessary credit applications and focus on managing your existing credit accounts responsibly. By avoiding new credit inquiries, you can help safeguard your credit score from unnecessary fluctuations.

 

✅Maintain a diverse credit mix
Having a healthy mix of credit accounts, such as credit cards, personal loans, and mortgages, demonstrates your ability to handle various types of credit responsibly. However, avoid opening new accounts for the sole purpose of diversification, as this could backfire.

 

✅Review your report
Under Australian law, you’re entitled to one free annual credit report from each credit reporting body. Reviewing your report allows you to identify areas for improvement and ensure the accuracy of your credit information.

 

How to quickly improve your credit score
How to quickly improve your credit score
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5% Deposit & No LMI (Lender’s Mortgage Insurance)

Typically, if you borrow more than 80% LVR (Loan to Valuation Ratio, i.e., more than 80% of your property purchase valuation) in Australia, it is considered as risky loan transaction by lenders and your mortgage needs to be insured to protect the lender giving you money in the event you default (i.e. do not pay your mortgage). This insurance is called Lender’s Mortgage Insurance (LMI) and will be required to LMI fee (premium).

 

In other words, Lender’s Mortgage Insurance (LMI) is insurance that protects lender in the event you default (i.e., do not pay your mortgage) but you need to pay LMI fee or premium and you get no benefit out of this insurance.

 

LMI fee can be thousands of dollars (say $15K, $20K or $35K or even higher) depending on loan amount, property location, LVR (90%, 95% etc) and few other factors, so it is best to avoid, where possible. We are here to help to you avoid this LMI fee.

 

You can avoid LMI fee if:
1) You are a first home buyer, or
2) Work in a professional field like medical, accounting, lawyer etc, or
3) Employee of a bank, or
4) Have 15% deposit

 

As a first home buyer or someone buying their home after 10 years, you can be eligible for LMI waiver ( that is you do not need to pay LMI ) if you meet the following 3 conditions.
a) You are Australian PR, Citizen or NZ citizen, and
b) Last financial year income was less than $125K for a single or $200K for a couple
c) Buying a property below specified threshold such as it is $900K for Sydney, $800K for Melbourne

 

Please reach out to us if you need any more information or like to avoid paying lender’s mortgage insurance.

 

5% deposit % no LMI

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Ready to buy your home – 6 important steps before making an offer

Are you ready to buy your dream home and make an offer? Making an offer on a property for the first time is both exciting and nerve-racking. To be as prepared as you can, it’s important to take several steps to ensure you’re making a well-informed decision. Here are six steps to follow:

 

👉 Have loan pre-approval in place
Having a pre-approved loan in place will give you confidence about how much you can borrow, the lending limitations, and how much you can spend on a purchase. It will also make you a “qualified buyer” in eyes of selling agents giving you more negotiating power. You can call or check your borrowing capacity using our calculator https://mortgageempire.com.au/borrowing-power-calculator/

 

👉 Comparing the market
Before making an offer, it’s crucial to understand the true value of the property. Start by contacting a local real estate agent for detailed reports on neighbourhood trends and recent sales. Visit open houses in the area to compare property features and prices firsthand. Use this information to determine if the asking price is reasonable or if there’s room for negotiation.

 

👉 Checking the Title
Different property types come with different Titles, each with its own legal considerations. Houses typically have a freehold Torrens Title, while units, townhouses, villas, and commercial spaces usually have Strata or Company Titles. Consider the advantages and disadvantages of each Title type and think about how the Title might affect your future plans for the property.

 

👉 Reviewing the paperwork
The seller’s contract of sale contains crucial information, such as details about zoning, drainage, land plans and ownership, along with outlines of the sale process, payment terms and transfer of ownership. Given the legal complexities, it’s advisable to seek professional advice when reviewing this paperwork.

 

👉 Engaging a conveyancer or solicitor
Professional legal advice is essential before making an offer. A conveyancer or solicitor can provide valuable insights and guidance, review the specific details of each property you’re considering and help identify any potential issues. Engaging these professionals early on can ensure a smoother path to settlement.

 

👉 Organizing building and pest inspections
A final crucial step before making an offer is to organize building and pest inspections. A qualified professional will inspect the property’s overall condition, checking for any damage or pest issues. They will provide a detailed report with their findings. This step can potentially save you significant money in the long run. If all inspections check out, you’re ready to make your decision and put forward an offer.

 

READY TO BUY YOUR HOME - SIX IMPORTANT STEPS BEFORE MAKING AN OFFER
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Buy your Dream Home in 5 Easy Steps

Here is how you can Buy Your Dream Home in 5 Easy Steps

Our promise to you is this; if you follow the steps, you will buy your first home whether it be tomorrow, in three months, or sometime in the future. We promise to point you in the right direction and always be with you.

 

Step 1: Speak to an expert like us to plan your journey

Planning is always one of the key elements to any success. The same applies to you as a First Home Buyer, therefore it is particularly important that you plan before you start your home buying journey. I am sure you have heard “the 7 Ps” – Proper Planning Prevents Piss Poor Performance”.

This is where a Mortgage Specialist like us comes into play, who has been practising in this field for more than 12 years and have helped thousands of others in the past to achieve the same result of owning their home that you are seeking today.

 

Step 2: Understand property buying process and cost involved

Buying property involves legal work, you can do this legal work yourself, but is not recommended. It’s a far better idea to employ service of a solicitor or conveyancer.

When buying a property, there are significant costs associated such as stamp duty, LMI, legal cost, bank fees, building and pest inspection, building insurance, removal cost etc. All these costs will determine how much money you need to save as a deposit to buy your home.

 

Step 3: Create a budget and set your savings goal for home deposit.

No matter what type of home you want to buy, you will need to save a deposit.

We often get asked – how much deposit do I need? We are sure you have the same question.

Although the question sounds easy, and the answer is really complicated and it depends on so many things, but most importantly on your circumstances and price of home that you like to buy.

In some cases, deposit as little as 2% could be fine to buy your dream home, in another case 5% deposit could be enough or you may even need as high at 13% deposit. So, unfortunately there is no one answer that will cover everyone circumstances.

The size of your deposit is a really important factor in your first home buyer journey. A larger purchase deposit may mean a lower interest rate, as you become less risky to the lender. It may also mean you avoid Lenders Mortgage Insurance (LMI).

 

Step 4: Get a pre-approval & choose the right loan

Purchasing a property is a bit of a balancing act, and before you start looking at properties and areas to buy in, it is a MUST that you need to know your home loan borrowing capacity ( that is what is the loan amount that a lender is willing to give you to buy your home). And a pre-approval will do just that.

A pre-approval is a tick from the lender that you’re eligible to apply for a home loan up to a certain limit. The lender will look at your income and your expenses and decide whether you can afford the loan amount and its repayments. The lender will also consider your savings deposit versus the amount you’re requesting the bank to lend to you.

Having a pre-approved loan in place will give you confidence about how much you can borrow, the lending limitations, and how much you can spend on a purchase.

 

Step 5: Become an expert in the area you’d like to buy.

When you purchase your first home to occupy, it’s likely you’ll be living there for a few years. With this in mind, it’s important you do your research to ensure it meets your immediate and future needs in terms of location, the type of home, and also the repayment amount. The key to achieve this is through thorough research prior to attending any home inspections.

When considering various locations, think of its proximity in terms of your workplace, schools, transport, local shopping centres and amenities. Do you want a house or an apartment? Or perhaps a townhouse? How will this impact your future goals.

One tip we always tell our clients is to attend local property auctions or open home inspections in the area you have in mind. This will give you a very clear idea around what the reasonable market price is for the properties you like and will also teach you how to manage an auction without bidding too high.

Buy your Dream Home in 5 Easy Steps
Buy your Dream Home in 5 Easy Steps