ALG Australian Lending Group

Tag: repayments

  • How Can I Improve My Loan Interest Rate and Chance of Approval?

    You’ll be pleased to hear that there are a multitude of things you can do to try and decrease the interest rate on consumer loans as well as improving your chances of receiving an approval!

    Some of these tips involve long term actions that would potentially be done before visiting your broker, whilst others are quite quick solutions to work in your favour.

    What can I do before visiting a broker?

    1. A history of stable employment

    This is always attractive to lenders as it suggests that you have a steady income and are less likely to struggle making repayments.

    Specifics:
    Generally, lenders look at the last 6 months to see if you’ve kept the same job in that time. Overall, they often look at 3 years of employment history to determine how often you change employers.

    Exceptions:
    If you’ve changed jobs but stayed in the same industry in the last 6 months, it’s not a huge concern for lenders. It also pays to talk to one of our experienced finance brokers as there can be further exceptions.

    2. Deposit Amount

    How much money are you willing to contribute as a deposit? As far as loans go, the greater your deposit, the more inclined a lender is to approve your loan application and offer you a lower interest rate.

    3. Credit Score

    The higher your credit score, the better! As a general rule, anything over 600 is considered satisfactory. However, keep in mind that the standards change between lenders.

    Specifics:

    • By ensuring that all current loan/debt repayments are made on time for their entire lifespan means that they won’t incur any negative reporting on your credit file.
    • Minimise loan applications as each one is listed as a credit enquiry, which can raise worry with lenders if there are an excessive amount.

    4. Stay away from payday lenders

    Payday lenders such as Nimble will have a detrimental effect on your ability to acquire a loan. Many banks and non-bank lenders refuse to lend to anyone with a payday loan within a 6 month period of that loan finishing.

    5. Are you living with parents or renting?

    Lenders often provide a better rate to someone who is renting rather than living at home with parents. The logic stems from the fact that renting is generally more expensive, so you’re already proving your ability to commit to those recurring expenses. Whereas, it is anticipated that people living at home will at some point move out and therefore incur higher living expenses. This could cause some people to no longer afford or prioritise their loan repayments. So the rate is higher because the risk for the bank is higher.

    What are some quick solutions to improving my chances of securing a loan?

    1. Delete your Afterpay account

    Getting rid of your Afterpay (or any buy now, pay later accounts) increases your chances of getting accepted and could potentially increase your borrowing capacity. Finalise your repayments and close the account!

    2. Cancel your credit cards

    If you have the ability to pay off any outstanding debts on your credit card, it is a great idea to do this and then cancel them all together. It’s likely that your lender will ask you to do this regardless.

    3. Age of your asset

    If you’re getting a loan to purchase an asset such as a car, then the age of the asset will actually affect your interest rate. The newer, the better according to lenders.

    Lenders generally have specified interest rates for assets of different age groups. For example, assets that are 3-6 years old may claim the same interest rate. However, these age groups differ for each lender, as do the rates.

    Finance brokers, however, are privy to these specific policies for each lender. This is just another reason that our brokers here at ALG are able to get you the best loan. We compare lenders by their policies and rates, specific to you.

  • How to Stay on Track with Mortgage Repayments

    5 Tips to Stay on Track

    Are you making your mortgage repayments but finding that your bank account is getting stretched every month? Use these 5 tips to stay on track or get back on track with your mortgage repayments.

    Take the “what if” test.

    Look at your mortgage repayments and ask yourself “what if” about multiple scenarios that could happen to you.

    What would your repayments be if interest rates go up? Would you still be able to afford them?
    What if your or your partner lost your job? What if someone in your family becomes injured and they incur medical expenses?
    Do you have a buffer of savings that you could draw on?

    If the answer to any of these questions makes you feel uneasy, then it could be time to re-evaluate your loan terms.

    Create a budget and stick to it.

    Make a budget to monitor your spending and help you to keep up with your mortgage repayments. It’s important to set a realistic budget. One that is achievable and provides flexibility for when life throws curve balls at you. A great way to stick to a budget is to automate additional savings or mortgage repayments. That way you don’t notice it leaving your account and then you’re left to spend the remaining funds as per your budget.

    Speak to your broker/lender

    As finance brokers, it is our job to manage your loan for the entirety of its term, not just at the beginning. If you ever have questions, then you are welcome and entitled to contact your broker for help.

    If you are struggling with mortgage repayments, then your lender is required to assess your situation and respond within a set period of time. It’s important to ask for help quickly before the situation gets worse.


    Remember that finance brokers and lenders have worked in the industry for many years and have seen a number of cases that are similar to yours. There is no need to be embarrassed or ashamed.

    Some solutions that lenders might offer:

    • An extended loan period. Meaning you make smaller repayments over a longer time. Note: this may lead to you paying more interest due to the increased term.
    • Postpone your repayments for an agreed period.
      In some circumstances, lenders will agree to postpone payments if clients are likely to regain control of their finances within a short time frame.
    • A combination of both solutions.

    Don’t be afraid to ask for help

    Many people have experienced financial struggles. The faster you reach out, the less serious your situation will be. If you are unsure about what to do or are having trouble getting the results you want, confidential help is available from a financial counsellor.

    Things to be wary of:

    • Using credit cards or getting payday loans.
      Going further into debt as a means of dealing with mortgage repayments is not a viable solution and will only increase the seriousness of the problem. Seek help before this avenue is taken.
    • Borrowing money from family and friends.
      Whilst this method has the potential to work, it grows your debt as well as potentially creating the feeling of being a financial burden to your loved ones.
    • Refinancing or consolidating debt.
      Whilst this too can be a beneficial way to manage debt, it’s important to get trusted financial advice before doing so. You may end up paying more on some loans and could be better off paying them down separately.
    • Switching home loans.
      Keep in mind that it could take time for you to recoup the costs of switching.

    Don’t struggle in silence. If you start to experience difficulty with your mortgage, approach your broker/lender as soon as possible to discuss your repayment options.