Are you wanting to get ahead of the curve when it comes to your finances? Do you want to have the freedom and flexibility to access the lending you require to assist you in building your financial future? Our experienced team of brokers have seen it all, found solutions for some of the most complicated financial situations and helped many clients, no matter what their circumstances to achieve their home ownership and asset building dreams.
There is a lot that has changed in the lending market from a regulatory point of view, particularly over the last few years. As a result, it is more important than ever to follow the ‘Golden Rules of Finance’ to ensure you meet lender criteria and position yourself for financial success.
Our brokers have put together the following list to help you create a positive journey in relation to how you manage your finances and as a result, experience the freedom of building your financial future with ease.
1. Pay ON TIME
Pay your bills and loan repayments on time. The credit reporting system has changed a lot over recent years and now lenders can review your habits in relation to paying your bills on time. It’s not about whether the money is in the bank, it’s about your timeliness. Our recent article – credit reporting – don’t be caught out will help you understand the changes, how they affect you and what you can do to adapt.
2. Design a budget and STICK TO IT
Designing a budget is not about restricting your financial freedom and enjoyment, it’s about leading the way in relation to designing the life you want by understanding what you are spending (where your money is going) and identifying where you can reduce your discretionary spending to achieve your long-term financial goals. Launch has created a comprehensive budget planner to help you!
3. Generate WEALTH
Make the decision today that your future self will thank you for! Set aside money each month to build wealth, whether that’s a regular savings plan, investment strategy or debt reduction plan. Depending on your circumstances, some lenders may require genuine savings, so by showing that you are consistently setting money aside to your savings plan, you are not only positioning yourself well for a successful loan approval – you are also developing great habits for financial freedom. Challenge yourself to increase this amount month to month and sit back and watch the results.
4. BE AWARE of major life events affecting lending
Be aware that major life events such as a change in employment may negatively affect your borrowing capacity. Probationary employment can make it difficult to obtain new finance. When you are considering applying for new lending, ensure there are no major foreseeable life changes in the near future.
5. Consider CLOSING STORE CARDS
If you are following the ‘Golden Rules of Finance’ so far – do you really need the interest free store cards? If you do have any open accounts such as AfterPay or ZipPay, consider closing them as they will negatively affect your serviceability. Lenders will assess your borrowing capacity based on the maximum amount of credit you have available on all credit and store cards – the lower the limits on your cards are or the less available ‘credit’ you have access to, the more favourable your serviceability.
6. MANAGE spending patterns
Similar to Rule #1 and the changes to credit reporting, lenders are now required to take into consideration discretionary spending patterns as part of your loan eligibility criteria. Our advice – don’t make large purchases during the credit application process and act ‘as if’ you are already servicing the loan you want to apply for.
7. PROTECT wealth with insurance
As you follow the ‘Golden Rules’ and generate wealth – you will then have more to protect. You can plan and practice great habits however sometimes life throws you a curveball that you didn’t see coming… ensure that you have adequate insurances in place to protect your wealth.
8. REVIEW your credit report
One of the first things lenders will do when assessing your loan eligibility is to review your credit report. You can be a step ahead of the game by getting a copy of your credit report – it’s free! Have a look at whether you have any defaults or late payments and take action to address them. There are companies that can help you to have defaults removed or you may negotiate these yourself. Also ensure that you minimise credit enquiries, as numerous credit enquiries on your report can deter lenders.
9. SHOP AROUND for options
How often do you walk into a shop and find the new suit or pair of jeans that has the perfect cut, comfort and fabric to suit your individual requirements? You may be lucky but generally it’s not often! The same applies with lending, it is important to shop around to find the loan product that has the right features for your unique situation. Your current lender may not be offering the most competitive option for you, an expert broker who knows the market will be well placed to help you explore your options and find the right loan for you.
10. SEEK professional advice
Finance can be complex, however when you have experienced broker working in the industry day to day, the process can be made simple. The market is always changing, what may have been right for you last year or 5 years ago may not be right for you today. Seek professional advice from a qualified finance broker to help you make the right decisions for YOU.
There you have it! Our top 10 ‘Golden Rules of Finance’, follow these rules and anything is possible – they are tried and tested, having produced 1000’s of success stories. At Launch Finance we love seeing our clients’ home ownership dreams come true. If you’d like to meet with one of our expert brokers to review your finances, you can book an obligation free consult here or give us a call on (08) 9367 4222.