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‘I have $3 million in super but can’t get a home loan’

Mozo’s Tom Godfrey says: “If you’re on a 3.3 per cent interest rate, your bank might work in a 2.5 per cent buffer and assess your ability to make repayments at 5.8 per cent”.

Those official guidelines aside, any borrower should seek to keep their mortgage repayments below one-third of their before-tax salary, as any more is defined as mortgage stress.

Besides income Ashley, there is another key factor a potential lender will want to know: your exit strategy.

In your late 60s, they will be reluctant to lend to you over 30 years, for example, unless they know how you plan to discharge the loan earlier.

One potential exit strategy might be to sell your (presumably) bigger home and downsize, or to use some of your $3 million in super to pay out the home loan, so that you are ultimately living debt-free. Those are the sort of strategies a bank may accept.

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However, if you still come up empty handed, don’t keep applying to different financial institutions. That will drive down your credit score and hurt you further.

The easiest and most-effective technique then might be to ask your existing mortgage lender for an interest-rate discount.

Go armed with the fact that you know there is a quality product that charges a bargain-basement 1.89 per cent variable rate, as well as offers competitive fixed rates.

If necessary, threaten to leave. After all, they don’t know you may struggle to get a loan elsewhere.

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