Are you one of those people that’s afraid of the big, bad bank manager and hate the thought of asking for a great big home loan? It really doesn’t need to be such a scary process, but to help make things go a little bit easier for you, Loanbrite has some great tips on how you can improve your chances of being approved for a home loan.
1. The bigger your deposit the better
Try to accumulate as large an amount as possible to put down on the price of the property so that a) you reduce the amount of money you need to borrow in the mortgage and b) the provider can see you’re a seasoned saver with a proven ability to set aside cash. Find out how much deposit you require to get into your dream home.
If you are in mortgage insurance territory can demonstrate satisfactory genuine savings?
2. Reduce (or even eliminate) outstanding debts
If you have a lot of credit cards or other debts that need paying off, you should try to do this before applying for a home loan, as high debt points to an unreliable repayer. Make sure, too, to cancel any credit cards you don’t use, as the more you have open in your name, the less your potential borrowing capacity will be. Another top tip is to reduce your credit limit, once you’ve managed to pay off some of the card.
3. Check your credit history
It’s a good idea to know where you stand, so you can be ready to defend any past defaults or late payments. Checking before you apply also gives you the chance to rectify any inaccuracies on your report. As many lending institutions and banks are on standard credit reporting across Australia.
Find details about obtaining your credit report here.
4. Limit your applications
It’s easy to get carried away, but try not to apply for several different home loans at once, as this information can deter lenders (all applications are recorded on your credit report).
5. Keep a written budget
A comprehensive and realistic budget keeping diary listing your incomings and outgoings will impress a lender of your ability to keep track of your finances, as well as help you organise yourself. Then it’s just a case of fingers crossed for a thumbs-up!
