Mortgage lenders believe that if you have children you are more likely to default on your home loan repayments. Following the new responsible lending rules that came into effect on January 1 2011, banks and other mortgage lenders have slashed the amounts they are prepared to lend people who have children to support.
So if you have children, you might find you have been stymied by the new responsible lending laws. Especially if you were thinking of upgrading from your current home to a larger one and need to borrow more than 80% of its value.
If you are borrowing more than 80%, your lender will refer your application to a mortgage insurer. These guys will use a thing called the Henderson Poverty Line guide to determine your ability to service your loan. This guide will limit a couple on a combined income of say $80000, a credit card with a limit of $20000 and four children to a loan of approximately $182,000. Good luck buying a home in one of our capital cities with a loan of this size. Also be careful refinancing your current loan, you may find the lender will want to recall your loan if they think you cannot service it.
If you were a childless couple you would be able to get a loan of $393000.
To me this is just another attempt by the Government and lobbyists to keep us masses in our place. My view is that a lender should be able to make a decision on a micro level case by case. People are very different when it comes to finance and in my view no survey can properly gage this.
Whatever happens when you are looking for a new home, please first check your current home loan statements for errors. Mortgage lenders make basic errors with home loans every day. I endorse a simple piece of software that may help you recover thousands in overcharged interest from your lender.
If you are worried about your borrowing capacity, I suggest a chat with a mortgage broker.