Finding it harder to obtain a home loan? We’ve put together a list of things that you can do to maximise the chance of getting a home loan. There are ways that you can put yourself ahead of the pack.
Your lender will want to know all about your employment, income, assets, liabilities, credit history and more. They will want to see:
- A steady income, preferably from stable employment. If you run your own business or are self-employed, the bank will want to look into your business finances too. If you’ve just ditched your day job to work on your internet start-up, now may not be the ideal time to apply for a home loan.
- A clean credit history. Your history can go back as far as seven years for serious credit infringements. On the plus side it can contain positive information such as your record of paying bills in full and on time. Get a copy of your credit history to ensure it is correct and work on creating a good history well before you plan to borrow.
- A track record of saving. Show the bank that you have the discipline to regularly save money. This will also help you build a bigger deposit – another plus that will make it easier for the bank to lend to you.
- Low debts. If you have borrowed to buy a luxury car it might be worth trading in the Ferrari for a second-hand Toyota. And try to pay off any other loans as quickly as possible.Also, be aware that lenders don’t take into account the actual amount owing on your credit cards but your total limit – i.e. the amount you would owe if you went crazy with your plastic. Cancel any unnecessary cards and reduce the credit limits on others to the level that you genuinely need.
- A budget. Following a budget demonstrates financial responsibility. Keep it realistic so you can stick to it but flexible enough to cope with the odd unexpected event.
- Time to repay. Older borrowers may find that lenders are reluctant to grant a 25-year mortgage to someone with 10 years to go before they retire. However, lenders may look at when and how much superannuation you can access in the future, and your current savings and repayment capacity.
- Honesty. It’s important that you provide full and accurate information to your lender. Remember that they have access to a range of information sources, from your credit history to your payslips and bank statements.
Your local financial planner can help you get your debt under control, work out a budget and establish a savings plan.
When it comes to borrowing, it’s worth talking to your local, licensed mortgage broker. Brokers work with many different lenders, know their policies and information requirements, and can educate and guide you through what can be a daunting process. Above all, they can help you find a fairer deal. After all, your broker is behind you all the way.
If you’re in the market for a home loan, the team at Tanti Financial Services can assist you. For over 30 years, we’ve been helping our clients reach their financial goals. Let’s work on yours next. Contact the office today on (02) 4735 6644 or email email@example.com.
www.oaic.gov.au Accessing your credit report
www.moneysmart.gov.au Credit reports – Check your credit health