I am a first home buyer looking to buy our first home. My wife has a casual job earning about $20k a year and I am on $100k, my income is the one going in the application. We are going with Westpac. We have two credit cards, one with Westpac and the other ANZ (one $7,500 and the other $6,000), I wanted to close the ANZ one but my broker advised that not to, since I would eligible for home loan with 5% deposit.
I have ordered a copy of my credit file and it has 20 enquiries over the last 5 years. This financial year I have two (in March), both for personal loans with Westpac and ANZ (which have been fully paid).
I have never had any defaults and due to lack of understanding (more stupidity), when I was applying for a car loan 4 years ago I made about six applications, when looking for a credit card another six and Optus/Telstra. The rest are store cards – Myer Visa Card etc, which have all now been closed. I have looked at all the enquiries – and only ones I think would be changed is a double enquiry by Telstra for internet and a double enquiry for a car loan by ANZ (I have already called them and they will get back to me). My Veda score is also low, as a result of these applications.
I have about 7% of the deposit (and including LMI will be about 5%)
I had a chat with a Westpac Home Finance Manager and she told me not to be worried since I have a credit card and the recent enquiry is with them. I then spoke to a broker, who says I have a good chance. Reading what people go throw I am worried.
But I am still worried – the LMI Company will still need to be convinced. Other than having two of them removed and reducing them to 18, what options do I have? A colleague referred me to a company that helped them ‘fix’ their file, but I do not think they will help since these are legitimate enquiries I did, except two I am following up. Sounded like a scam too.
In case of a rejection, will it make a difference to go for land first? Land is about $260k and we can build in a years’ time?
Ok where to begin… I will make some comments in points format:
1. Lenders look at 12 months credit enquiries, then 6 months, then last 3 months. So the question here is what does your credit file specifically look like in each of those periods.
2. Some lenders auto credit score and some don't. Both Westpac and ANZ auto credit score so if applications are borderline then it may not be good to go with a lender that credit scores. Other lenders like Suncorp may be a good fit as they do not credit score.
3. There are different types of credit enquiries – unsecured and secured. Obviously unsecured credit enquiries are more destructive than secured enquiries
4. I have had many situations (even with Westpac) where applications have been declined due to multiple credit enquiries but they were due to the applicant purchasing so many properties so my point is that you should be able to justify explain the number of enquiries.
5. Credit enquiries are not the only thing that lenders look at – there is also employment background, occupation type, unsecured debts, number of applicants, asset position, and so much more so it would be a mistake to only look at the number of enquiries on an application.
Hope that helps.
TheFinanceShop | Elite Property Finance
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Hi needhelp
While 20 enquiries is quite a bit – it sounds like your file hasn't been too active over the past 12 months, is that correct?
If so – you should be ok. The cluster of enquiries from the car finance and credit cards can be explained. You need to be careful with car finance – they'll throw applications left, right and center.
If you've had good conduct with your existing Westpac credit card – that should get you some bonus points with credit scoring. Your employment type, borrowing capacity, length of employment and about a hundred other factors will also come into play.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Thanks Shahin for your detailed email.
I have 7 credit enquiries in the last 12 months, one in the last 6 months and none in the last 3 months. The recent one is with Westpac. I am expecting Telstra to remove one which appears to be a mistake.
I have prepared a detailed summary of each of them and evidence that the cards were closed/loans.
My broker said I can only go with ANZ and Westpac, because I don't have 20% deposit and I have had accounts with both. Other than changing jobs a year ago (and previous position for 3 years), I have been in my place for 7 years.
May be I should get another broker.
Ok credit enquiries wise – you are ok. To a degree I would like to see a breakdown in the enquiries (i.e. if they were unsecured or secured enquiries).
Re the jobs – is it the same line of work/professional or is it a change in professions?
TheFinanceShop | Elite Property Finance
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Jamie M wrote:Hi needhelpWhile 20 enquiries is quite a bit – it sounds like your file hasn't been too active over the past 12 months, is that correct?
If so – you should be ok. The cluster of enquiries from the car finance and credit cards can be explained. You need to be careful with car finance – they'll throw applications left, right and center.
If you've had good conduct with your existing Westpac credit card – that should get you some bonus points with credit scoring. Your employment type, borrowing capacity, length of employment and about a hundred other factors will also come into play.
Cheers
Jamie
Thanks Jamie. As mentioned above all these cards are credit and I have never been late. I work as a full time senior accountant, but changed jobs last year. I was in the previous company for three years.
TheFinanceShop wrote:Ok credit enquiries wise – you are ok. To a degree I would like to see a breakdown in the enquiries (i.e. if they were unsecured or secured enquiries).Re the jobs – is it the same line of work/professional or is it a change in professions?
Same profession, I am an accountant.
Ok again thats good – if the application is structured correctly then application looks ok.
TheFinanceShop | Elite Property Finance
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Yes all looks ok but i have to say sounds amazing to me that your Westpac Home Loan manager has told you "She will be right mate"
He / she has can add no weight when it comes to the credit scoring process or application itself.
I would be using a lender that individually assesses each deal.
With a good explanation of each of the credit entries i can't see too much of an issue with a 95% lvr loan + LMI.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Agree with Richard above, the loan manager has no pull when it comes to approving the application, what they executed on you was a sales technique.
As for your broker telling you that you can only go with ANZ or Westpac, that is not true. Many lenders out there who do up to 95% LVR.
Cheers,
Tom
Hi Tom 95% Lvr and more……………..
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
PLC wrote:Agree with Richard above, the loan manager has no pull when it comes to approving the application, what they executed on you was a sales technique.It's amazing how they have the arrogance to make these reassuring claims. The person in credit who's actually assessing the application doesn't even know how the internal credit scoring works – so for the branch staff to give the "she'll be right" on a 95% lend is quite ignorant on their behalf…and could come back to bite them.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
If you submitted the application on Monday you should have received the approval back by Tuesday.
Westpac is currently working on 1 day turnaround times.
TheFinanceShop | Elite Property Finance
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Well, my broker is the one telling me this? I am assuming I can not communicate with the bank direct?
There is no way that you cannot have an answer by now if you submitted an application to westpac on Monday.
Have you spoken to him since monday?
TheFinanceShop | Elite Property Finance
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I spoke to him today – and also called him on Wednesday. He actually said I should expect an answer early next week. I received an alert that Westpac checked my credit file on Tuesday. I will give him a call early tomorrow morning.
Can I get rid of him or it is too late?
Best to stick with the current broker as you don't want another hit on your credit file at 95%.
However – something is not right and Westpac is probably the best bank right now in terms of turnaround times.
Just to give you an idea – I submit an application this morning at around 8am and had it Formally Approved by midday.
Just tell him that you spoke to your friend's broker who is also going with Westpac and he said the turnaround times are 24-48 hours.
TheFinanceShop | Elite Property Finance
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Thanks everyone for your comments and advice. Our mortgage application was lodged on Monday with Westpac so we are just crossing our fingers.
It is clear that our broker has not told us many things in terms of the options we had, I only thought we were limited to ANZ and Westpac.
I have had two enquiries on my file removed and my Veda score is now almost 600.
I will update as soon as we get feedback.
Shahin's right – WBC are super fast with turning around deals. Was there a valuation involved? That can slow approval times up as credit will be waiting for it to be returned. They may have also requested additional info from your broker which will slow things down a bit.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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