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whether you're buying your own home or an investment property the biggest barrier to entry is getting a home loan now in 2022 we've got so much happening especially with interest rate hikes you've got lenders going in and increasing their rates it's important now more than ever that if you are interested in buying property you need to know how you can get approved or at least have the best chance to go and get approved for a home loan in this video i'm going to share with you some of the hacks that i've learned over the eight years of investing into property as well as talking to a bunch of brokers and banks if you are interested keep watching [Music] hey guys my name is ravi and welcome back to personal finance with ravi sharma if you're new here smash that subscribe button because i talk about real estate cryptocurrency and financial freedom now before i sort of jump into how we get a home loan how do we get approved and increase our borrowing capacity the biggest thing you can do in 2022 and i've been saying this all along is invest in yourself and your education your mindset is what stops you from actually going in and investing and it's that fear that has stopped so many people over the last couple of years to not invest because we listen to these media headlines and think oh my god the world is crashing housing markets going down stocks are going to collapse crypto's going down everything is at its worst time that's when you need to get the logic in and that's why i encourage you join the patreon community there's a vip patreon group i have live q as every single month so that goes for about an hour and you also get access to all the previous q and a's that we've done for over the last seven months in addition to that i also do weekly audio podcast sessions which wraps up the entire market especially as to what i'm looking at and i share with you guys exactly what i'm looking at when it comes to crypto and nfts as well so there's a link in the description below definitely join now we've already heard whispers of the rba coming out in increasing interest rates you've got cba coming out and predicting that hey we're going to increase the cash rate to about one percent mind you that would be like a 10x move from here because we're at 0.1 percent cash rate and they think we could potentially have 9 rate hikes if we go up by 0.1 every single time which i personally don't think is going to happen however this year might have been the year that you said to yourself or you said to your family member but hey i'm going to purchase a property this year and i don't care what stops me but you know what can stop you and that's stronger than superman is apra and the bank lenders if they stop you from actually purchasing a property because they can't give you access to loans that means you sit on the sidelines again watch property prices go up inflation kills the dollar and eats into your savings so let's jump straight into a few hacks that i've learned and there are a few here that you may not have ever thought about or seen on another youtube video so definitely check it out number one is pay attention to your spending this is fairly obvious but for some people who've never bought before they don't realize that it's not just like the last couple of weeks before you go into the bank and say oh well like the last couple of weeks i didn't order uber eats they should approve me for my loan it's that some banks actually look at 3 6 and sometimes even 12 months at your statements so they could go back in that time and find patterns between what you do how you do it and then they come up with a narrative around what you actually spend there's usually a sheet that they give you and they say well what do you think are your expenses monthly across housing food groceries going out entertainment and things but then there might be some banks and lenders that actually go through line by line and figure out if you're telling the truth and based on that spending on your statement is what they go and assess you on in that time if you've actually been really lazy and didn't want to cook for like a whole month you're probably eating uber eats and menu log a lot more than normal this will significantly affect your borrowing and this is why it's important on two things one knowing how much you spend and why you spend it but two also be mindful if you are preparing to go and get a loan then start prepping ahead of time so three to six months is usually a good period of time go in there fix up what the banks are going to actually look at and then go and proceed number two self-employed loans this is something that there's not enough information about and i know this personally because i had to go through it for years and years i've been working for myself for over six years and i know that when i've tried to find information around self-employment self-employed loans and how to get a loan as a business owner it's always been very difficult and i think it's more important now to talk about it because we've probably had more people quit their nine to five jobs and you might be one of them smash that like button because who doesn't like working on a passion business and now you get to go full time congratulations but if you are someone that's gone and recently changed over or thinking about changing over it's very important to pay attention to this is that when you go from a salaried employee to actually owning your own business or being self-employed the banks look at your servicing income very differently if you're a salaried employee some banks will take one month some take three months of pay slips and your employment contract however if you're self-employed they may not take your last three months in fact some banks require you at least one year financial statements if not two so what does that mean that means basically you need to be operating for at least one year have those financial statements your company tax return and of course your individual tax returns complete before you can actually go and apply for a loan so if you're someone that's going i want to refinance my home take out some equity and i also want to start up my own company well you might be better off staying in your nine-to-five job get the advantages of loans and things like that and then jump ship because once you jump you've probably got at least 12 months before you can go in and borrow again i wish there was more content around this outside because as we have more people go across into self-employment they are asking those questions and there's simply not enough information if you are interested in more content around self-employment company structures and how to start a business definitely leave a comment down below i'll be sure to go start making some content around that number three is term extensions this is one that i actually had to learn through experience right and so what this means is that when you take out a loan the average home loan is about 30 years which means effectively if you go interest plus principal over 30 years you'll have paid down the loan and that's the contract you signed with the bank but what you can do is that you can go out and refinance your loan now most people go refinanced to a lower rate and they say yes happy days you can actually extend the term of the loan so let's say you got the loan say four years ago at 30-year term loan now four years later you would only have 26 years left but if you go out and refinance to another 30-year term that yes means that you're going to have to pay this off in another 30 years versus 26 but if you've been on this channel long enough you know what i feel about when it comes to debt and how to structure this properly to get financial freedom which is why i'm not concerned by that if you're actually able to extend that term it means the rate of repayment actually goes down because now you've got a loan balance that instead of 26 years you're going to pay it off in 30 years which means that improves your cash flow and maybe the difference between you getting approved for a loan or not number four is eliminate unnecessary liabilities usually people will stop at saying oh you know what get rid of your credit card if it's unused you know that affects your borrowing but it goes beyond that you've got to look at things like your hex and also something that gets often overlooked is after pay and zip pay these services like after paying zip pay have helped a lot of people i'm sure but it's also put a lot of people in distress because you're often spending money you don't have and it's like rule 101 i'm pretty sure they teach you that in school as well which is don't spend money you don't have and i like to take it a step further is don't spend money on dumb to impress people you don't like but if you can go and pay out these little things here and there these little steps actually make a huge difference to your borrowing capacity and could be the difference between you scaling into another investment property or having to stop at just one or two if you have enjoyed this video so far i know often you get so intrigued with uh you know information about finance you forget to smash that like button and for some that are new here there's a red button it's called subscribe so definitely smash that as well it helps the youtube algorithm goes out to more people that actually need it and we build a community together number five is focus on cash flow and income traditional investors when it comes to real estate is capital growth buy and never sell that's pretty much what we've been taught and then if you want to add on top of that it's pretty much buying blue chip areas metro cities and whatnot as you know from this channel i talk about everything apart from those things not that i'm against it it's just that i look at it logically and the numbers make sense where i can get capital growth and cash flow now if you have a focus from the beginning that i want to have best of both worlds which is the cash flow and capital growth it keeps you in the game longer so often the term is that the cash flow keeps you in the game the capital growth gets you out of the game now that's not necessarily a bad thing when you're getting out of the game it means basically you can retire because the capital growth and the appreciation will be a lot more than just simply the cash flow which is why i don't just go hey let's just buy in mining towns get a heap cash flow but don't worry about the capital growth you need both to scale up your portfolio and that's the same thing i say when it comes to income if you're in a job that you really enjoy congratulations is fantastic but if you're looking to increase your borrowing capacity unfortunately there's no substitute for actually increasing your income now increasing your income could mean that you increase the income from your investment like you could earn passive income through your crypto and you probably didn't know that there's a video here i'll link where you can actually earn up to 10 15 20 a year on your crypto so definitely go check that video out but it could mean that you're increasing your rents but fundamentally you want to be increasing the active investment that you put in which is your salary job or the business that you're working in this is something that people need to focus on there's no magic pill if you're wanting to increase your debt levels you need to increase your income ongoing number six is side hustle incomes often what i've seen is people that start up pokemon shops or you know they want to sell online or they have a youtube channel they don't structure themselves the right way if you really structure yourself properly you can use that income as part of your servicing as well now to give you an idea it doesn't really matter how small you actually are because even a ten thousand dollar profit in a year might be a small little passion business you've run on the side and you've gone hey i don't think of this as a company like who cares but that ten thousand dollar profit can actually increase your borrowing capacity up to about seventy to eighty thousand dollars now that could be the difference between you buying a property for 500k versus 560k it gets you into a whole different market and allows you to keep growing this machine this machine i always talk about at some point the machine is going to love you back and give you back passive income that's what we're trying to do here is replace our active income with the passive income not because we hate our jobs and hate our lives it's more so to give us choice because there's going to be times in your life where you can't predict what happens next whether it's a health concern whether it's family or whether it's the fact that you've just gotten over working for someone else this is why we go and create the machine early on if you're in your 20s your 30s and 40s it's awesome that you're here and i really urge you to go out there create the side hustles because increasing your income means unlimited potential versus just going i'm just going to continue saving what i make it's a defensive mindset versus an offensive mindset it's the same sort of thing i've been doing for the last couple of years when i was djing and promoting at nightclubs i always knew every single dollar i earned had a multiplier effect on my borrowing capacity that borrowing capacity allows me to build my machine and it just multiplies over and over again because the eighth wonder of the world which is so beautiful often gets overlooked is compounding interest growing the machine growing your assets that's the game here if you have enjoyed this video definitely drop a like and drop me a comment if there's something that you've done as part of your journey to actually go and increase your borrowing capacity i'm sure to help the rest of the community out here thank you so much for watching i'll catch you guys in the next one thanks guys