Brisbane is the most populated city in Queensland and the third most populous city in all of Australia. The cost of living in Brisbane is not as expensive as Sydney’s and is considered the 126th most expensive city, according to the 2020 Mercer Study that surveyed 209 metropolitan cities worldwide. However, being able to live comfortably in Brisbane will require that you have your finances in order.
If you are a Brisbane resident and you find yourself in need of a large sum of money for whatever reason, you must have already thought of applying for a home mortgage. There are a lot of companies such as Finance Broker Brisbane that would help you get a home mortgage, however; you must first know the three major determining factors that will determine whether you will qualify for a loan or not. These three factors are collectively known as “ICE”. Here are their meanings.
INCOME – The first factor is the “I”, which is short for income. How much money you will have left after subtracting your monthly household expenses from your gross monthly income, will determine your “Debt to Income” ratio or DTI. This value will let your creditors know your ability to pay for the mortgage you are applying for as well as all your other recurring debts. You must have a DTI percentage of 36% or lower for you to qualify for a mortgage.
CREDIT – Your credit score will reflect your ability to pay your creditors regularly and on time. Credit scores start from 300 to the maximum rating of 850. It is a rule of thumb that people with higher credit scores will get the best loan packages. If your score is more than 700, then you can easily qualify for a mortgage.
EQUITY – Equity or “E” refers to the current appraisal of your home minus any existing mortgage that you may have. If you do not have any existing mortgages, then you will have a higher chance of being qualified for a loan.
The above three factors will determine your qualifications of getting a loan, but the type and amount of mortgage will depend on your “ICE” combination. This means that even if you have low monthly income, you may still qualify if you have high equity and credit scores.
How to Lower Your Mortgage Rates
A home mortgage is a loan that you can use for whatever reason. If you are planning to take out a mortgage, you must have a property that you can use as collateral. The mortgage company will hold on to your property title and will only return it to you if you have settled all the agreements of your mortgage. Your mortgage company will either give you a fixed interest rate or a floating interest rate depending on their assessment of your loan application. It is therefore important to know how to keep your mortgage rates low. Here are some ways on how to do it.
Clean your credit – Check to see if you have a good credit rating by getting your credit report. If you have a poor rating, you can clean it up by paying off outstanding credit card debts and reducing the number of credit cards that you have. Having a good credit standing will ensure that your mortgage application will be approved with lower mortgage rates.
Pre-qualify – You can also have yourself pre-qualify for a mortgage. There are a lot of mortgage companies in the Brisbane area that can assess you and determine whether you qualify for a loan or not. Provide mortgage companies with information about your income, liabilities and assets so that they can determine the mortgage rates that they will offer you.
Compare and contrast – Being pre-qualified for a loan does not necessarily mean that you need to push through with it. So, if you have gone through several Finance Broker Brisbane companies for the pre-qualification process, compare the mortgage rates that they are offering you and choose one that you can pay comfortably. You can also let the mortgage companies know what you do or do not like about their terms and ask them if they could change it to suit your requirements.
Shopping around and comparing can get you the best mortgage rates there is for your home.