How debt impacts on your home loan application
Most of us have some debt – from a student loan or tax debt to credit cards, personal loans, car loans, or an existing home loan. And any debt or credit cards you have when you apply for a home loan will impact on your application in two main ways.
First, a lender will factor in your need to service this debt when assessing your borrowing capacity, or your ability to service a new loan. Second, your repayment history on your existing debts, as well as the number of times you’ve applied for credit, will affect your credit score.
Lenders use your credit score as a guide for how responsible you are with money and whether you qualify for a home loan in the first place. (more…)