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Moe S.
Moe S.
Brisbane, QLD
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What would be more likely to be accepted by the bank for a land & house package loan.
My credit history is good with no defaults, just credit inquiries. Also I have a personal loan where I owe the bank $25000 and making my $880 monthly payment on time.
I am looking to get a home loan for $400000 from the bank and have got $40000 in savings.But I don't know if I should pay off my personal loan first then I have less deposit or I could get the home loan without paying my personal loan.plz help?

5 years ago
Comments

Hi Moe, need a lot more info for accurate response. Based on the info supplied:
NOTE: the below should not be considered as financial advice. Speak with a suitably qualified professional to evaluate your position.

• your 25k personal loan is costing you a small fortune in costs. What's the interest rate?

• your 40k in savings is earning maybe 2.5% that your likely paying tax on the interest earned.

• the 25k loan reduces your home loan servicing potential by ~107k

• your income less expenses will determine the loan amount you are able to access. (Amongst other variables)

You might look at paying out the personal loan and then really get stuck into building your deposit, which you'll have more money to do as you won't be paying interest on the personal loan.

Sounds like you're pretty keen. Go get your home.

Responses

Hi Moe,

By the look of your situation it is all going to come down to your current income and employment situation.

As long as you have the income to support the home loan and personal loan most lenders will be happy with the 10% deposit you have saved. The fact that you can show consistent repayments on your loan is a good thing

If you pay off your entire personal loan you will be left with less than a 5% deposit meaning that there are very limited options for banks that will lend to you.

My suggestion would be to sit down with a good mortgage broker who can explore all of the options for you and then you can make an informed decision on how you would like to proceed.

Please let me know if I can be of assistance

Regards
Nathan

Moe,
How much you can borrow is really determined by income and liabilities and expenses. So in order to give you a good idea of how much you can borrow , you need to complete an living expenses sheet and provide the broker with some income verification. It is possible that you will NOT need to pay off your personal loan if you have the income to support paying that as well as your new home loan and any other liabilities. However, if it IS REPAID, then obviously your borrowing capacity will be higher as then you can contribute another $880 per month to your home loan, but then you wouldn't have as large deposit and would incur extra fees such as Lenders mortgage insurance and the range of banks that lend with small deposits shrinks. We could look at both scenarios on paper and then you would be informed to make the correct decision for your circumstances.
I would be happy to have a chat or meet in person.
Call me 0417364718
Lizzy Warburton

Hi Moe,

You are very unlikely to be given a loan with a $15,000 deposit so you will have to look at servicing with the $850 per month taken into account.
I suggest you give Lizzy a call and meet with her to discuss all of your income and expenses and your loan borrowing capacity
Best of luck
Scott

5 years ago

Gday,
Thanking you all for the great advice and your time .

Lizzy, I will call you today.

Thanks

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