45 Lenders to 1 – Which of the 45 lenders can provide the best loan for my situation?
When a client approaches us initially, we have access to 45 different lenders to choose from. Then, each of the 45 lenders has a suite of different loans with different rates, so where do we start?
Ultimately, our goal is to find the lender who will provide you with the best terms, the best rate and the most suitable product, firstly though, we need to work out which lender you qualify for a loan with.
When we talk about qualification for a loan, if we go back 5 years, obtaining debt was extremely easy, lenders would generally not check in too much detail as to your income or expenses, they were more focussed in getting your business – then came the APRA rules on Responsible Lending, followed a few years later by the Royal Commission, now we see lenders being very diligent with the information they require and also reviewing the information we have provided.
Which of the 45 lenders are best for me?
So, to start with we ask some questions:
- How much do you want to borrow (what % of the valuation will this be?)
- What terms are you looking for?
- What is your income – how is it structured? What currency is it paid in?
- What are your expenses, rent, schooling, general living?
- Do you have any other debts?
- Do you have a bank relationship in Australia currently, if so, who and what type of services are you utilising?
These questions will start the filtration of the 45 lenders. For example, if you require an 80% loan then the number drops to 6, if you want a 70% loan the number is 17.
Then, we look at your income and expenses. Each lender uses a different method of calculating surplus income – or more precisely different formulas to discount your income (as it’s earned outside of Australia). Not all lenders loan on all currencies, so which do you earn?
Then, once we have calculated the amount of income the lender will allow us to use, we then deduct your expenses. This is where you’re the detail in your employment contract is important. Eg, do you receive a rent allowance – some lenders will allow us to Net this against the expense, some don’t, how does this affect the overall equation? We have to do this for rent, school fees, bonuses and other allowances.
Ultimately, the tighter the lenders rules, as a general rule the lender will have better rates available. So, our goal is to find as many lenders as possible to qualify for a loan before we look at product features and rates.