What you need to know to get your home loan approved
There is no denying that are a few more hoops to jump through when applying for a home loan but did you know that billions of dollars in dwelling finance is approved every month in Australia?
You can get your loan approved too, when you’re working with experts that know how to present your finances in the best way possible.
Before you apply for finance, think about these eight important home tips to get your application off on the right foot.
1. Know what you spend every month.
A busy life means most people have trouble tracking how much they spend every month. While this is not ideal in any situation, it’s doubly so now because lenders now look at three months of your bank statements, perusing them line by line, to assess your loan application.
If you’re at the stage of considering a home loan, it’s wise to stick to a budget, and be aware of all your living costs as well as being able to justify them, especially when it comes to one-off expenses like a holiday or at Christmas time or a major car repair; you need to consider those costs as part of your monthly budget.
During this time, it’s also a good idea to cut down on extravagances where you can like Uber Eats and the other conveniences as you may be scrutinised over this spending.
2. Make sure your bills are paid on time
Late payments on credit cards and personal loans have always been an issue when having a loan approved and from July this year, comprehensive credit reporting will be in place, meaning missed payments and overdrawn accounts are going to have an increasingly adverse effect on your credit history.
Regardless of the system in use, managing your personal debt is imperative to having your home loan approved and getting ahead financially. Keep up to date on your bills, pay credit cards on or before the due date and keep personal loans in order. People with good credit histories will the benefits of their rewarded with easier approvals and even lower interest rates.
3. Put a little away every day.
When it comes to money, the savviest people always have a financial buffer for unexpected events and emergencies. And when it comes to your home loan, a little money in the bank goes a long way to help with an approval. Financial assets like bank accounts, shares and superannuation are an important contributor to a good credit score. Depending on your life stage, your cant always have a lot of super but you should be able to have a few dollars in a bank account when you apply for a home loan.
4. A credit card can help
It might sound crazy, but a bank will regard your home loan application more favourably if you have an existing credit card as it also is one factor that improves credit score if you keep within the limit and make payments on time. However, maybe consider keeping the limit down as it does constrain how much you can borrow.
5. Get rid of excess credit cards.
The other side to credit cards is not to have too many. A lot of people think that several credit cards is a sign of good credit and in some circumstances this may be true. The problem with too many cards is that the bank is required to services your ability to repay your loan, taking into consideration the combined limit of all those balances. This can get in the way of you being able to borrow enough money to complete your purchase or refinance.
6. Don’t try to refinance too many debts
Debt consolidation is a legitimate strategy in the right circumstances but not if you’re trying to refinance too many loans and credit cards. This negatively impacts your credit scoring with the bank and can mean to loan won't be approved.
7. Keep lending enquiries to a minimum
Don’t make unnecessary enquiries to providers offering balance transfers and other inducements. Applying for credit cards and other loan products shows up on your credit history and lowers your credit score.
8. Get a copy of your credit Report
If you've ever applied for credit or a loan, there will be a report about you with a credit reporting agency which lenders use to assess your ability to repay credit. Everyone can access their Credit Record for free. Everyone should know what’s in the Credit record but it’s a doubly a good idea to get a copy before you apply for a loan. Make sure there isn’t anything in it that shouldn’t be there. If you’re uncertain, discuss the contents with your mortgage broker.
Discuss your specific home loan needs and formulate a strategy that’s right for you. Get in touch and organise your complimentary session today.