Welcome to the last instalment of my 3 part money series on becoming a Credit Unicorn, and my inside tips on how to utilise your new found magical-money-powers ✨✨✨
If you’re new here, consider checking out Part 1: Are You A Credit Unicorn? How To Find Out If You’re The Grand Poobah Of Borrowers and Part 2: You Don’t Need To Switch To Get Rich. How To Pick Up The Phone And Negotiate Your Home Loan Rate Like A Jedi
Home sweet home (but I’d rather forget about the loan).
Man, wouldn’t most of us? The thing is, unless Grandpa Jo or Aunty Flo left you a tidy inheritance, you recently won powerball, or you’re a freak-of-nature-saver, a loan is a reality of home ownership. While it can be a real downer to think about, getting a good one makes a literal cash-world-of-difference to your finances over your life, plus means you’re more likely to own your home outright, sooner.
In Part 1 I explained why being a Credit Unicorn get’s you the best home loan deal. In Part 2 I then gave you some expert negotiating tips to maximise your Credit Unicorn potential. In this article, I give you the inside track on how to level up to Unicorn status, if you’re not there quite yet.
Remember: This advice applies to those who are considering a loan for the first time, or who might want to refinance in the future…
Read on my friend.
1. Make your repayments on time
Credit Unicorns always ensure that their income is greater than their expenses.
If you’re looking to apply for a loan, review your current expenses and include your future loan repayments. You and only you are the best judge of if you can actually afford a home loan, based on your current spending behaviour. If you trim back the fat, only to find that once you have the loan, that money muffin top in your expenses creeps back, it’s wise to talk to you lender as soon as possible to discuss possible hardship arrangements.
2. Don’t make unnecessary loan applications
Whenever you make a loan application, it is recorded against your credit history.
Too many applications will give the impression that you are on a credit binge, or making numerous applications because you are being declined. When you do make an application, make sure it is the right product for you, and you have every chance of it being approved.
It would be a waste of your time if the product was never right for you or you were never going to be approved, considering the enquiry goes straight to your credit report card. Get as much information on the product and provide as much information about you to the lender to get a good gauge before you officially apply. With home loans, consider using a mortgage broker.
3. Reduce your debt levels
If you pay interest only on a home loan, you’re never going to pay down your loan.
Make sure you are paying principal and interest and, if possible, make additional repayments either as a once off lump sum, or just incorporate into your regular repayments.
When interest rates drop, continue making the same previous repayment.When you get a tax refund, pay it into your loan.When you get your bonus, pay it into your loan.
Finally…always be on the lookout for a cheaper interest rate, whether it’s with your own lender or an alternative lender.
4. Increase your income
More money does not equal more problems in loan land. The more you earn, the sooner you’ll pay off that loan.
Get that promotion. Negotiate that raise. Get that weekend job. Start that side hustle. Airbnb that spare room. Be a Uber driver at night. Rent your car out on Car Next Door. Start that gig on freelancer.com.
We live in an age where you can earn money from so many different avenues which were not available even ten years ago. Don’t ignore those opportunities.
5. Buy good quality real estate
Real estate prices do not always go up.
However if you pick good quality real estate, while prices will still not always go up, there is less of a chance they will go down, or drop severely. In Australia, houses are nearly always better than units. With sketchy construction governance over the last 20 years, some analysts are even going so far as to suggest apartments built during this period are like the ‘black plague of property’, and should be avoided, at all costs. Don’t believe the media hype all the time, but make sure you do your research before you buy. No one wants to end up like the Opal Tower residents…
A crappy house on the best street is nearly always better than the best house on a crap street. Don’t just get into the market for the sake of getting into the market, quality matters.
That’s it…
So there you have it - the full low down on how to achieve your life dream of property ownership, without getting yourself in financial trouble. Don’t accept the status quo when it comes to home loans, position yourself using the tips we’ve provided from this series, and accelerate your path to financal freedom using Credit Unicorn super powers.
FYI: To see how this all fits together with my grand plan to make Australia a nation of Credit Unicorns and Expert Ninja Negotiators, check out my soon to launch startup Cwedit, and join the waitlist.