Mortgage broker Smartline has urged its potential customers to get their "financial house in order", or risk being seen by today's more conservative lenders as "credit junkies".
Smartline managing director Chris Acret said in a media statement that if a credit file looks 'busy', this can cause lender declines as automated credit scoring systems class a borrowers as a credit risk.
“Borrowers have the best chance of success if they have a savings record, are up-to-date with all of their bill payments, and have resisted signing up for any additional debt," Acret said.
“This is increasingly important, as more and more of a borrower's repayment history is being recorded on personal credit files, which are carefully scrutinised by lenders," he said.
Acret said when lenders assess a borrower's ability to repay, calculations assume credit cards are drawn to their full limit.
Acret also made a case for borrower's to use the third party mortgage channel, arguing they will be able to reduce loan costs if they use a mortgage broker, rather than go direct to a lender.
“There is a pervasive view that lenders all offer the same products with the exact same requirements, but there is actually a good deal of difference between the lenders on interest rates, fees and credit policies,” Acret said.
“Borrowers can potentially save thousands of dollars by doing a bit of homework and contacting their lender to, for example, request a reduction in their interest rate."
Acret said in many recent cases, Smartline mortgage advisers had locked in life of loan discounts on interest rates, by simply contacting lenders on behalf of their clients.
