Investment Finance Archives

Cross collateralisation explained – how it impacts your home and investment loan

Posted on 30/06/202504/07/2025 by Hunter Scribe

If you’ve got more than one property or are planning to invest in property, your lender might suggest something called cross-collateralisation. It’s a common lending strategy, but one that comes with risks you need to understand.

Cross-collateralisation allows you to unlock equity in your existing properties without selling, but it also links your properties together in a way that can limit your flexibility.

What is cross-collateralisation?

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Cross-collateralisation is when the same lender uses more than one property as security for a single loan, or for multiple loans that are linked across multiple properties. It means your lender can have a claim over several properties instead of just one.

For example, say you purchased your first home with a home loan through a mortgage broker in Melbourne. Later, you decide to invest in a second investment property and secure an investment property loan. If your lender cross-collateralises these properties, they will register a mortgage over both your primary residence and your investment property to secure both the loan for your home and the loan for your investment property. You can actually borrow 100% plus costs this way with a single loan if you have the equity available!

This also means you’re leveraging equity to grow your portfolio. But cross-collateralisation ties your properties together in a way that reduces your flexibility.

Why cross-collateralisation can limit your flexibility

One of the biggest drawbacks of cross-collateralisation is how it limits your ability to sell, refinance or restructure without involving all your properties and the bank’s assessment of the entire picture each time you make a decision.

If you decide to sell one of the properties in your cross-collateralised portfolio, you can’t just sell it and pocket the proceeds. You’ll need to get the lender’s approval, which usually triggers revaluations of any remaining properties, and they might use the sale to reassess your loan terms. They might even keep some or all of the proceeds to reduce your overall loan balance.

This kind of restriction can be frustrating for borrowers who want to:

Refinance one property for a better deal
Sell a property to free up cash
Renovate or improve one part of their portfolio

Working with an experienced investment property loan broker can help you structure your loans in a way that supports flexibility and long-term growth.

Pros and cons of cross-collateralisation

Like any lending strategy, cross-collateralisation has its benefits and drawbacks. Here are some key points to consider:

Pros

1. Helps unlock equity quickly

Using the equity in one property can make it easier to secure finance for another without needing a large cash deposit or multiple loan applications to achieve the same thing across two or more lenders.

2. Creates simplicity

Some borrowers find it simpler to manage multiple loans under one lender, especially if they are new to property investment.

3. May improve borrowing power

By securing your loan across multiple properties, lenders may be more willing to offer a higher loan amount than if each property were assessed individually and with different lending polices applied.

Cons

1. Less flexibility when exiting

As explained, selling, refinancing or restructuring one property becomes more complex when it’s tied to others. Lender approval is required, and you may not receive all the sale proceeds if they need you to reduce your remaining loan balances.

2. Limited choice of lenders

If your properties are cross-collateralised, it can be difficult to switch just one loan to a different lender to get a more favourable interest rate or different terms. You might have to refinance all your loans simultaneously, which can be a complex and costly exercise.

3. Increased exposure to risk

If the value of one of your properties decreases significantly, it can impact the equity available across all your properties. This could lead to a situation where you owe more than the combined value of your properties.

What are the alternatives?

The alternative to cross-collateralisation is keeping your loans and securities separate. This approach is sometimes called “standalone” or “non-cross-securitised” lending.

With standalone lending:

Each loan is secured by just one property usually up to 80% of its value but up to 95% in some circumstances

You can refinance, sell or restructure without affecting other properties
You keep more control over your portfolio

A qualified mortgage broker can help you assess whether standalone or cross-collateralisation suits your strategy. It depends on your goals, equity, income and future plans.

Speak to an experienced mortgage broker before you decide

For some borrowers, cross-collateralisation can help unlock equity and support faster portfolio growth. But it’s not right for everyone and it’s something you should go into with your eyes open.

Before you agree to link your loans or properties, speak to a home loan broker who understands how to structure lending for the long term. An expert mortgage broker in Melbourne who clients trust will help you weigh the pros and cons, assess your risk, and explore smarter ways to use your equity.

Thinking about using cross-collateralisation to grow your property portfolio? Axton Finance can help. As a trusted mortgage broker in Melbourne, we’ll guide you through your options and make sure your loans are set up for long-term success. Call us on today 03 9939 7576, email getabetterrate@axtonfinance.com.au or click here to get in touch.

Victoria Property Investing: Affordable, Underrated and Still Full of Potential

Posted on 09/05/202522/05/2025 by Clinton Waters

If you’ve been following the national property conversation lately, you’ll know Victoria has taken a few punches in the media. From new taxes to doubts around investment returns, some buyers are wondering whether it’s still a smart place to invest.

But when you strip away the headlines and look at the numbers, Victoria’s value proposition becomes clearer and in some cases, stronger than other states.

Land Tax: Not Always What It Seems

Let’s take land tax, one of the most debated issues for property investors in Victoria.

For example, on a land value of $1,000,000:

Victoria: land tax approx. $4,770 per annum

Queensland: land tax approx. $4,700 per annum

It’s the same, right?

But here’s the kicker – once the land value increases beyond here, Queensland’s land tax grows faster.

Let’s say the land value is $1.8 million:

Queensland: $17,700 per annum

Victoria: only $11,850 per annum

So while Queensland is often seen as the “investor-friendly” state, Victoria may actually be more cost-effective once you go over the $1M threshold and at a cheaper entry point also! Would you believe that Melbourne’s median dwelling value ($776k November 2024) is ranked sixth lowest among the eight capital cities in CoreLogic’s Home Value Index (HVI) report published November 2024.

How Other States Compare

NSW: Higher tax-free threshold ($1,075,000), but house prices are significantly higher, pushing you easily into higher brackets.

Tasmania: Flat 1.5% over $25,000 – resulting in ~$15,000 land tax each year on a $1.0m property!

WA & SA: Mid-range land tax, but with less capital growth opportunity given the strong bull run of the last few years.

NT: No land tax at all but limited investment-grade property and demand.

ACT: Land tax based comparable but based on a more complicated formula

What You Get for Your Money in Victoria

Melbourne and major regional Victorian cities offer more value per square metre than most other capital cities in Australia.

For example:

A $900k budget in Melbourne could buy a modest renovated home within 20-25kms of the CBD, in a well-established suburb with great amenity and infrastructure. In Sydney, that might only get you a pokey unit or if you are lucky a townhouse much further from the city.

Plus, Victoria offers:

World-class schools, universities and infrastructure
Rich cultural and lifestyle diversity
A long-term track record of capital growth

Source Corelogic https://www.corelogic.com.au

A Word on Sentiment

Yes, the mainstream media has been pretty harsh on Victoria in recent years. But sentiment is just that – sentiment.

Melbourne remains one of the world’s most liveable cities, with comparative affordability to the rest of the country, strong population inflows, and continues to see low rental vacancy rates and high competition for quality homes.

Victoria – Still the Place to Be

As the old number plates once said, “Victoria – The Place to Be.” Based on the number of interstate inquiries we have been fielding in recent months, we still believe this is the case.

So while taxes matter, when you run the numbers and compare them to other states, Victoria stacks up surprisingly well – especially for investors with landholdings close to or over $1M in other states.

Ready to Invest Smarter in Victoria?

At AXTON Finance, we help smart investors structure their investment property loans for long-term success. Our experienced team of eight licensed mortgage brokers have extensive experience in investment lending mortgage solutions – we’ve got your back.

Chat with us today obligation free on 03 9939 7576 or message us here.

Should I Buy an Investment Property in Melbourne in 2025

Posted on 09/05/202502/07/2025 by Clinton Waters

Despite some recent fluctuations, Melbourne’s property market presents compelling opportunities for investors in 2025. While some forecasts suggest moderate growth (3% to 5% per annum), others are more optimistic, especially when comparing against interstate options that now appear much less appealing. Looking past short-term movements that have taken place over the last couple of years in Melbourne, the fundamentals remain strong. Melbourne’s median dwelling value is ranked sixth lowest among the eight Australian capital cities in CoreLogic’s Home Value Index (HVI) report published November 2024.

Why Consider Buying an Investment Property in Melbourne?

1. Affordability

Compared to Sydney, Brisbane and Perth, Melbourne offers more accessible entry points for investors, particularly in middle-ring and emerging growth suburbs.

2. Population Growth

Strong interstate and international migration continues to drive demand across Melbourne’s rental and property market.

3. Rental Demand

Vacancy rates are at historic lows, creating strong competition among renters and consistent rental yields for landlords.

4. Infrastructure Pipeline

Ongoing projects like the Westgate Tunnel Project, Metro Tunnel Project, Suburban Rail Loop and Melbourne Airport Rail Link will improve connectivity and boost property demand in new zones.

5. Diverse Housing Options

From period homes to modern apartments, Melbourne offers a wide range of opportunities for different strategies – whether you’re buying for capital growth, rental yield, or redevelopment.

Source Corelogic https://www.corelogic.com.au

Key Takeaway: Melbourne Delivers Value

Melbourne continues to offer value on a national scale, especially when factoring in land tax differences, as explored in our Victorian Land Tax Comparison Blog.

Compared to the high purchase prices and sharper land tax curves in Sydney and Brisbane, Melbourne remains one of the most attractive options for property investors in 2025.

Want Tailored Mortgage Advice for Your Next Investment?

Speak with the experienced mortgage brokers at AXTON Finance to structure your investment loan, maximise tax deductions, and grow your portfolio with confidence.

Call us now on 03 9939 7576 or leave a message to discuss a tailored investment lending solution for you.

The Rentvesting Revolution: Why You Should Consider It

Posted on 20/02/202520/02/2025 by Nick

What is Rentvesting?

Rentvesting is an increasingly popular millennial property investment strategy that allows you to rent in your preferred location while purchasing an investment property in a more affordable area. This approach enables you to enjoy the lifestyle you desire without sacrificing the opportunity to enter the property market and start building wealth. Rentvesting also doesn’t need to be restricted to just your hometown—investment opportunities can be identified in affordable interstate markets and high-performing regional areas, allowing you to maximize capital growth potential across different locations.

Why is Rentvesting Gaining Popularity in Melbourne?

Melbourne’s expensive property prices make homeownership in prime locations increasingly difficult.
Rentvesting provides a pathway to property ownership without requiring a massive upfront investment for an owner-occupied home.
You can benefit from capital growth in high-performing suburbs while maintaining lifestyle flexibility.

Why You Should Consider Rentvesting Over Traditional Homeownership

Overcoming the Affordability Challenge

The median house price in Melbourne has surged over the past ten years and, despite stabilizing in the last 18 months (at the time of publishing), may accelerate again as interest rates decrease. This can make it challenging for first-time buyers to purchase in their ideal locations.
Rentvesting allows you to enter the property market sooner without overstretching your finances, giving you more control over your investment journey.

Enjoy Lifestyle Flexibility While Investing

If you prioritize experiences, travel, and vibrant city living, rentvesting allows you to continue enjoying these without being tied to an excessive mortgage in an expensive area.
You can live in desirable areas while securing an investment property elsewhere that fits within your financial strategy.

Build Long-Term Wealth Through Property

Instead of waiting years to save for a home in your dream location, as prices accelerate away from you, rentvesting enables you to start building equity sooner.
A well-located investment property generates rental income, capital growth, and potential tax benefits, all contributing to your financial security.

The Benefits of Rentvesting

Enter the Market More Affordably
- You can step into the property market with a smaller deposit and lower initial costs.
- Buying in growth areas provides a stronger potential for long-term capital appreciation.
Take Advantage of Tax Benefits
- Claim deductions on mortgage interest, property management fees, and depreciation (seek taxation advice for details).
- Reduce taxable income through negative gearing benefits (taxation advice required).
Create Wealth Sooner
- Rentvesting can help you build a diverse property portfolio over time.
- Use rental income to help pay down the mortgage on your investment property.
Enjoy Greater Flexibility
- Continue renting in your preferred location without being locked into a large mortgage on your primary residence.
- Adapt easily to career changes, travel, or lifestyle shifts without the burden of selling a home.

Rentvesting Strategies for Success

Choosing the Right Investment Property

Research high-growth suburbs in Melbourne with strong rental demand and capital appreciation potential.
Select properties with a steady rental yield to ensure a positive cash flow investment.

Balancing Your Lifestyle and Smart Investment Choices

Set clear financial goals to align rentvesting with long-term wealth creation.
Avoid overcommitting by ensuring mortgage repayments remain manageable—just because a lender says you can borrow a certain amount doesn’t mean it’s the right decision for you.

Securing the Right Outcome

Having the right experts in your corner is essential to turning your rentvesting plans into a reality. By working with experienced professionals, you can make informed decisions that maximise your financial success while minimising potential hurdles.

Mortgage Broker: An experienced mortgage broker in Melbourne or Sydney will help you navigate the best loan structures tailored to rentvesting. There are multiple pathways to securing a loan with a deposit that may be lower than you think. This can include industry-specific lending policies for doctors, lawyers, engineers, and essential workers, access to government incentives, hybrid lending products that boost your borrowing capacity, or lenders mortgage insurance (LMI) options that enhance your purchasing power. Speak to the experienced team at Axton Finance today to discover what your options are.
Buyer’s Advocate: Engaging a flat-fee buyer’s advocate can provide invaluable insights into identifying and securing high-quality investment opportunities. AXTON Finance now offers this as an optional in-house service to help you accelerate your investment plans and negotiate with a plan that helps you win.
Property Manager: A great property manager is crucial to ensuring your investment is well-maintained and your tenants are reliable. They handle the day-to-day responsibilities, including rent collection, maintenance coordination, and compliance with tenancy laws. A skilled property manager will also help you navigate the ever-evolving rental regulations, ensuring you avoid problematic tenants and maintain a stress-free investment.
Conveyancer or Solicitor: A legal expert will guide you through the contractual and settlement processes, ensuring a smooth and compliant transaction. Our preferred contacts can even help you review a shortlisted contract before you negotiate – as the saying goes – it’s not what’s in a contract – it’s what isn’t that matters!
Pre-Purchase Inspections: Conducting thorough building and pest inspections will help you avoid unexpected surprises, dodgy DIY repairs, and hidden issues that can help protect your investment.

How AXTON Finance Can Help

At AXTON Finance, we specialize in helping first-time investors navigate the rentvesting strategy with expert real-world mortgage advice. Our team ensures you secure the right loan structure and helps you build wealth through smart property investments.

Ready to start your rentvesting journey? Contact AXTON Finance today for an obligation-free discovery discussion on how we can help you achieve your property goals!

Are You Paying the Bank Loyalty Tax?

Posted on 14/10/202421/10/2024 by Rix Almonicar

When was the last time you checked if your home loan is still the best deal out there? If it’s been a while, there’s a good chance you’re paying the “bank loyalty tax” — that hidden cost of sticking with your lender without questioning if they’re still giving you the best rate. Let’s break down why this happens and how Axton Finance helps you avoid this costly mistake.

What is the Bank Loyalty Tax?

The “bank loyalty tax” refers to the higher interest rates that loyal customers often end up paying simply because they haven’t refinanced or challenged their lender for a better rate. Banks and lenders often reserve their most competitive deals for new customers, enticing them with lower rates while you, as an existing customer, are left paying more. It’s frustrating but true: loyalty doesn’t always pay in the world of home loans.

New Deals for New Customers

Many lenders offer their best rates and incentives to attract new customers. As a result, you, who have been faithfully paying your mortgage, may be left on higher rates that were competitive at the time of signing but no longer reflect the best value available today. Staying with your current lender without regularly reviewing your rate could mean you’re missing out on significant savings.

Axton Finance: Keeping Your Deal Great

At Axton Finance, we believe you deserve the best deals — not just when your loan settles, but for the entire life of the loan. That’s why we conduct yearly loan reviews for you, proactively working with lenders to secure rate reductions and better terms. We use cutting-edge fintech software to automatically monitor your loan rate, ensuring it remains competitive. Imagine getting a call or SMS from us letting you know that we’ve successfully negotiated a better rate for you, without you lifting a finger. That’s the kind of service we provide.

Time for a Change? We’re Ready to Help

If your lender won’t play ball and refuses to adjust your rate, despite your loyalty, we won’t leave you hanging. We’ll use our industry expertise and powerful technology to explore the best options available across the market. If refinancing makes financial sense, we’ll make the process seamless, ensuring you benefit from the best possible deal. The days of being “too busy” to act on your mortgage rate are over — with Axton Finance, we do the work for you.

Let’s Make Sure You’re Not Paying the Loyalty Tax

Don’t let inaction or loyalty cost you thousands of dollars over the years. Book a time with us today for a no-obligation review of your home loan. We’ll help you determine if your lender is still giving you the best deal or if it’s time for a change.

Call us at our office, contact us here or schedule a free consultation to start the conversation. We’re here to make sure your mortgage stays in top shape, so you can stay focused on your goals, not your rate.

Listen To Clinton’s Interview With The Real Estate Podcast

Posted on 06/03/202407/03/2024 by Clinton Waters

Household Income Homebuyers Surged to $220,000 – Clinton’s interview on Home Affordability!

Listen to episode #928 of @therealestatepodcast where Clint is interviewed by the shows host Craig. In this short 15 minute podcast Clint provides his expert insights on home affordability, interest rate forecasts, the surge in household homebuyer incomes, and the dynamics of sharing property ownership.

Which Professionals Do You Need When Buying A Property?

Posted on 06/04/202322/04/2024 by Luke Rowland

Purchasing a property is one of the biggest financial decisions you will ever make, and at AXTON Finance we know the importance of having the right professionals by your side when embarking on your property journey.

There are several experts involved in the property buying journey, and each plays a vital role in ensuring that you make informed decisions and get the best result. These professionals will also be key to ensuring you receive the correct advice in the future.

Here are some of the important professionals to engage when purchasing a property:

Mortgage Broker: One of the first experts you should engage when purchasing a property is a mortgage broker. An experienced mortgage broker will help you secure the best possible mortgage by understanding your needs and unique situation to then compare various lenders and interest rates. They will also help you determine your borrowing capacity and assess your eligibility for government grants or incentives. By working with a mortgage broker, you can avoid costly mistakes, save a lot of time and money in the process. As one of Melbourne’s best mortgage brokers you will be hard-pressed to get a better professional in your corner. Book an obligation free chat with us today here or call on 1300 706 540.
Solicitor/Conveyancer: A solicitor or conveyancer is another crucial professional you need to engage when purchasing a property. These experts help you navigate through the legalities of the property-buying process. They can help you understand the terms of the sale contract, identify any legal issues, and ensure that you have a clear title to the property. They can also advise you on stamp duty, taxes, and other settlement legal obligations.
Buyers Advocate: Buyers advocates are professionals who work exclusively for the buyer NOT the vendor like real estate agents do. They help you find the right property based on your brief, negotiate the best price, and manage the entire property-buying process on your behalf. They have access to off-market properties, and they can help you avoid common property-buying mistakes. They can also provide you with independent advice on the property, its potential, and its value.
Accountant: An accountant is another important professional to engage when purchasing a property. They can help you understand the financial implications of buying a property, such as the tax obligations, ownership options, negative gearing benefits, depreciation, and expenses. They can also help you set up a structure to minimize your tax liability and advise you on any tax benefits or incentives available to you.
Financial Planner: A financial planner can help you assess the financial implications of buying a property on your overall financial plan. They can help you understand how property investment fits into your overall financial goals and advise you on the best ways to finance it. They can also help you structure your finances, assess your cash flow, assess the adequacy of your insurance protections and plan for your financial future.

So to help maximize the likelihood of a successful property transaction it is essential to surround yourself with the right professionals to guide you through your property-buying journey. Each of these professionals brings a unique set of skills and expertise to the table, and working together with you over time will not only ensure that you get the best result on the initial purchase but the best advice moving forward as you grow your wealth in the years to come.

How To Get Approved When Refinancing Your Home Loan

Posted on 06/03/202322/04/2024 by Clinton Waters

With the rapid increase in interest rates in Australia and many people coming off ultra low interest rates there has been a cause for concern for many people looking to refinance their mortgages. With the onset of higher interest rates, lenders are substantially more cautious and selective when it comes to approving mortgage applications. We are even seeing many examples where people cannot refinance to a better rate because various lenders are applying higher assessment hurdles to a loan they are already servicing which is locking people into their home loans. However this may not need to be the case, there are a few clever but very simple ways to increase your chances of getting your refinance mortgage application approved. Here are some tips to help you get started:

Review your credit score

A higher credit score can increase your chances of getting approved for a mortgage, even if interest rates have risen. Review your credit report and make sure there are no errors that could negatively impact your score. If you have a lower score, consider working to improve it before applying for a mortgage. Being late on loan repayments, making too many credit applications, moving address regularly or having numerous consumer debts can all negatively affect your credit score.
Demonstrate a stable income

Lenders want to see that you have a stable income that can support your mortgage payments. This is especially important if interest rates have risen since you first took out your mortgage. Provide documentation of your income, including pay stubs, tax returns, and bank statements. Bonus income can also be used in many circumstances but policies vary considerably from lender to lender – best to speak to us about your option first.
Reduce your debts

Lenders look at your debt-to-income ratio, which is the amount of debt you have compared to your income. If you have a high debt-to-income ratio, it could be a red flag to lenders. Consider reducing your credit card limits or paying off some debts before applying for a mortgage. Reducing your credit card limit by just a few thousand dollars can have a fairly substantial effect on your loan. As of the time of publishing, most lenders want to see your debt-to-income ratio less than six times.
Shop around for lenders

Different lenders have different requirements and criteria for mortgage approvals. Shop around and compare rates and terms from multiple lenders to find the best fit for your financial situation. Of course the best way to do this is through the professional services offered by the team of experienced mortgage brokers at AXTON Finance.
Be prepared to provide additional documentation

Currently, banks and lenders are requesting additional documentation or information during the application process. Be prepared to provide this information in a timely manner to keep the process moving forward which will reduce the time it takes to ‘yes’ and for you to enjoy your lower rate.
Extend your loan term

This one can make your borrowing capacity higher but can make your mortgage ultimately a lot more expensive. So while you may be able to get a loan term of 35 or 40 years this can be very costly if you are already 10 years into a 30 year mortgage – tread with caution on this one but an experienced mortgage broker will be able to model out the pros and cons for you.

In summary, getting your refinance mortgage application approved despite rising interest rates requires some simple planning and preparation. With these tips in mind, you can increase your chances of getting approved for the refinance of your home or investment loan and secure a better interest rate.

Get in touch with one of the experienced team at AXTON Finance today to refinance to a better rate.

Call us today on 1300 706 540 or book a quick obligation-free mortgage review online here.

COVID19 – AXTON Support Page

Posted on 23/03/202022/04/2024 by Clinton Waters

Firstly our small team at AXTON Finance hope that you, your friends and your family are looking after yourselves during this time. Please listen to government advice on how you can play your part to keep yourself and others safe during this pandemic.

Australian banks and lenders pitch in

On Friday 20th March The Australian Banking Association (The ABA) announced a unified response to assist Australians during this crises.

Below is a summary of COVID19 links available from each lender in the Australian market place.

This page is being updated as more information comes to hand.

Key points to consider – our brief summary

– The term ‘repayment holiday’ SHOULD NOT be interpreted as interest being waived. It is only repayments (interest) being deferred. You still have to pay the capitalised interest added to the loan balance in the future.

– Qualification requirements are likely to apply (eg unemployment, significantly reduced hours, at risk industry etc)

– Our opinion is that the deferred repayment should be used where genuine hardship is being experienced or is expected. In the long term adding (capitalising) interest for six months or more can add a significant amount of interest to your total loan cost.

– Most lenders are offering up to six months relief in repayments. Some are offering up to three months with a checkin at that point for a further three months.

– Credit reporting agencies and lenders have already outlined that the hardship arrangements are typically not reported as defaults, and therefore do not impact a borrower’s credit score, with APRA also stating on Monday 23rd March 2020 that banks need not treat repayment holidays as arrears.

– The very cheap fixed options we are starting to see should be considered carefully. Often you cannot make extra repayment on a fixed rate, there is often no redraw and expensive break costs can also apply should you pay the loan out early.

– It may be economical to consider refinancing to a new lender to take advantage of cheaper rates, a new interest only term or one of the current cash back rebates available before you simply defer your repayments.

Speak to your AXTON broker if you would like a mortgage review (click here for a free review) or to discuss any of the points above.

Useful COVID19 Lender Links

Bank Of Melbourne (click link on main page to COVID Information)

If in doubt or if you just want to chat about your situation please contact your mortgage broker to assist where possible.

Contact details are as follows:

Adrian Grant – adrian.grant@axtonfinance.com.au – 0415 735 819
Clint Waters – clinton.waters@axtonfinance.com.au – 0422 464 353
James Hardiman – james.hardiman@axtonfinance.com.au – 0403 775 558
Paul Kusli – paul.kusli@axtonfinance.com.au – 0439 337 789

Our office number (1300 706 540) is still actively being monitored as we run a full VOIP system and can be contacted as per normal.

Many thanks

Your team @ AXTON Finance

Photo by Branimir Balogović on Unsplash

10 tips that can help your mortgage application

Posted on 30/10/201922/04/2024 by Clinton Waters

As you have probably heard in the media the nations lenders have clamped down on their lending criteria as a result of pressure from various government agencies like APRA and ASIC and from recommendations made during the Banking Royal Commission into banking misconduct.

It would be fair to say that many lenders have perhaps taken this a little too far which has resulted in a market place full of inconsistent applications of an incomprehensible set of rules for borrowers to deal with.

As a result of this we felt that the following information can be used as bit of a guide to help maximise your chances of securing finance approval by implementing any number of the following tips.

1. Fill out your application form in full

Lenders will often apply a score to your loan application based on the information you supply and if you skip on optional questions this can be detrimental to the strength of your application if things a little tight. For example even if you have a savings account with another bank with a small amount in – tell your proposed lender. If you have a middle name don’t forget to include it – it matters. If you have moved a couple of times try and be accurate with your living history as lenders often marry up data they can see on your credit file with the information supplied in your application.

If you are looking to refinance or buy your next property check out client fact find here – this is a fantastic form which is responsive to asking you the questions we know a lender will want to know – nothing more and nothing less! We can contact you after you have completed to run some tailored options past you.

2. Don’t submit your application to too many lenders or brokers

Lenders get very concerned when they see on your credit file that you have applied to a number of credit providers within a short period of time for about the same amount of money. The lender in question will often take the pessimistic view and think that there is something wrong with your application and has been declined by other lenders prior to it so will pick over your file with more detail trying to find out why you would apply so many times.

3. Do you have credit defaults?

This might sound scary and a reason for a lender to decline a loan but many lenders have different policies that may consider your scenario depending on the circumstances and what you have done to remedy the situation. As a general rule of thumb defaults from utility providers like power and telecommunication companies have less impact on your scenario than do defaults on financial service providers like personal loans, credit cards and home loans.

It is important to realise that with the evolution of the positive credit reporting regime lenders can now increasingly see the conduct of other institutions credit facilities. So if you are late on your credit card payment with the CBA and your home loan application is with Macquarie Bank, then there is a good chance that they can see this on your credit file down to which months you were on time and those that were not!

Treat your repayment history with a healthy level of respect and you will find your application will run pretty smoothly. A good mortgage broker or banker will be able to work with you prior to submission to identify any sort of severity and work out the best course of action and the lenders most suited the scenario you have presented.

If in doubt you can get a free copy of your credit file from mycreditfile.com.au (a service from Equifax Pty Ltd). We can take a look at it for you free of charge and provide you with some insight – feel free to contact us here.

4. To Afterpay or not…

The advent of the ‘buy now and pay later with no interest’ companies like Afterpay and Zip Pay creates an interesting situation for lenders. In simple terms these are not seen as a great look on your bank statements because the lender makes the assumption that these often relatively low cost purchases were made because you did not have the money in the first place and with retailers quick to jump on the band wagon with this offering its even available on products and services that may be considered essential. Our recommendation is generally not to have these buy now pay later arrangements if you are seeking to make a mortgage or finance application.

5. Support Docs

You will of course have to supply items like payslips, ID, mortgage statements and tax returns etc depending on your situation. This often slows down the process when the information requested is not provided in a timely manner. Many lenders simply get to your file and if information is missing they request whats needed and place your file at the back of the queue again. Sometimes information supplied can result in additional questions being asked so be prepared for this to happen and its nothing unusual albeit it can be frustrating.

6. How much do you spend?

OK I get it that a budget is boring but again an increased focus is being made on just how much borrowers are spending on living expense and there is a general reduction on the reliance of HEM (Household Expenditure Measures) standards and a more tailored approach. Having a summary ready before your finance meeting will help you have a more productive and realistic expectation of your borrowing capacity for any sort of approval. There are often many ways that you can reduce and improve your living expense without making drastic changes in the months lading up to when you are looking at securing a mortgage. Go through your statements and look at where you may save money via;

Reducing utility bills by shopping around suppliers
Reducing or eliminating credit card debt
Do your food shopping with a list and don’t buy by impulse
Take a packed lunch (this $10 per day can save you $216 per month in after tax dollars!)
Love coffee (so do we) but consider a pod machine or something similar over the 4.90 large flat white with almond milk once or twice a day
Pay yourself first (savings) – putting money away first before you pay for everything else is a simple yet powerful process to help you get ahead. Think of every time you get a pay rise how easy it is spend that new amount of hard earned cash! There are some great online tools that can help with this. One that we love is Raize.com.au and ING Bank – these two companies have variations of a system that automatically squirrels away savings by rounding up your purchases to the nearest dollar and allows a regular savings plan. Simple, effective and above all – happens without effort. (note if you click the link above to Raize you receive a $5 credit to your new account as do AXTON Finance)

7. What happens if you are having or planning for a child

Lenders are now required to ask about any expected changes to your future income that may affect your ability to meet repayments. This of course is a requirement to be answered truthfully and is strengthened by your ability to provide other information about how you may deal with such a situation. For example if you are about to go on maternity or paternity leave you could state that you have a certain amount of funds available for the estimated period of you being on reduced income to meet the commitments of your loan. A return to work letter and using a lender with a strong appetite for this sort of scenario will also help you a lot.

8. How good is your mortgage broker or banker?

Of course we may be a little biased here but having an experience broker working with you will help explain things in plain English for you and be across the lending policies of dozens of lenders and not just one (like you would get directly at a bank).

The quality of your application submission that is made by your broker or banker can really dictate how smoothly your application goes. Do some simple research like looking up your preferred broker or banker online through Google, LinkedIn and the other usual social media links. Usually you will get a pretty quick impression as to how experienced and professional they are. If in doubt trust your instincts!

9. Consider the wider market

It is often that the more competitive products and policies lie outside the big four banks. Well over 50% of all mortgage lending goes to just four of the major banks. At AXTON finance, only 20% of our lending in the last six months has gone to a majors! There are better deals to be had if you are willing to look outside of the square it can save you tens of thousands over the life of your loan.

10. Is the cheapest rate the best?

A business mentor once told me of the following three things;

Good, fast and cheap…. pick two. It is impossible to have all three.

Wise words to live by indeed.

A quick search of the internet may list some amazing rates that look too good to be true and while it is still may be worthwhile considering you should also think about;

How volatile is that rate online? Sometimes a great rate may be unsustainable for a lender to offer for a long term and you end up getting rate creep with increases outside of RBA changes. While you will be rather annoyed if this happens it would be good to understand what sort of history has been evident with the lender in question?
Does the lender’s computer say NO?. In many instances lenders try and shoe horn customers into rigid processes with offshore credit decisioning driven by computer systems. If you fall outside of this sort of lenders policy due to any complexity then you want a human with experience going into bat for you. Paying an extra 0.1% or 0.2%pa in rate can often mean the difference between submitting to a lender who may view your application as being poor versus another one that is fine with your set of circumstances. Use a quality mortgage broker who understands the rules to maximise your outcomes and reduce your stress.
Does the lender have a good application and onboarding process or is it a process with baked in systems that worked in 1991 when fax machines were cool? This can have a significant impact on turn around times – a good broker will have excellent experience of this fist hand and can guide you.
Cheap online specials often blow out credit application queues resulting in turn around times that can take weeks (even months). Currently there is one lender that is out to almost 20 business days to pick up a file – do you have that sort of time to wait?
Enquire about what sort of service the lender has with clients. A quick look up of reviews online can give you a feel about one lender over another. However read with caution as people often use the internet to complain and rarely to praise.
Ensure that you understand the product that you are seeking really does have the features you need. There is no point paying for stuff you are unlikely going to benifit from if there is a cheaper and/or simpler product available that does what you need it to?

So there you have it – ten tips on helping get your mortgage application approved!

Please feel free to contact us on 1300 706 540 and ask for Clint or one of the team to help you out. We a sure you will love speaking to an experienced person and not a call centre!

Best regards,

Clint Waters
0422 464 353
AXTON Finance