Article by Breanna Taylor. This article was originally published on ibuildnew.com.au and has been republished here with permission
For most aspiring homeowners, getting a home loan is usually part of the deal. With banks tightening their policies, some find that applying for one may be a tougher road than expected. Years ago, people were saved the scrutiny of endless checks. But now we find our costs being examined right down to our morning lattes and online shops. Here are some tips we find useful to increase the chances of getting the home loan you want:
A way to appeal to banks is to prove you are good at saving money towards big ventures. Despite the cost of everyday living, having savings records to show you can still save a little for a rainy day will show that you can cope under pressure. As banks rarely let people borrow 100%, the 80% you may be granted still leaves 20% of the overall cost unaccounted for – this is where your own money becomes important.
It doesn’t look great when getting a home loan you have a list of unpaid debts still waiting payment. Your debt-to-income ratio will be used by banks to see how well you will be able to carry extra baggage once you are paying for your mortgage. The lower the ratio, the higher the chances that you will get approved for your loan.
Though they can be handy in our day to day lives, having outstanding payments and overdue fees on Afterpay or overdrawing your credit card may be that final hurdle standing in front of you and the loan you need. If you do have a big credit card limit, consider reducing it or cancelling it altogether. Banks will be more appeased if you have just the one card with a reasonable limit.
When getting a home loan, borrowers should always make extra special care to revisit their credit report once in a while. Your credit rating will be taken into account by banks to gage an idea on just how well you will perform as a borrower, and whether you are deemed too risky. To increase your chances of getting your home loan application approved, be sure to get ahead in the game and check your credit history before submitting your application. This is vital to check that companies haven’t made a mistake in their processing, or if they have you can amend this before presenting it to a bank and jeopardizing your chances. For instance, an old credit card account might still be charging you despite you no longer using it.
As it is generally your income that will be used to pay your mortgage, lenders will want to track that you can hold down a stable and secure job whilst being faced with home repayments. Banks will like to see that you have stayed within the same company for the duration of longer than six months. Having job loyalty to the same company for years will put a green tick next to your name, as it shows you have some solid security. If you have switched jobs in the last six months, don’t stress! Banks can see your prior employment history.
Some people think the golden rule when getting a loan is not never put your eggs in one basket. Well, this is 100% wrong and could damage your credit rating! While comparing lenders is sometimes helpful, submitting loans all across the board will reflect in your rating and start to appear as a red flag for banks.
Confused over the terms your broker is throwing around when speaking about your different home loan options? Get in the know with our article on the top 7 key mortgate terms for first home buyers.
Have you got your pre-approval and are ready to buy? iBuyNew are here to help you choose the perfect property for your needs, whether that be a house and land package, townhouse or apartment. We can help you through each step of your buying journey. Contact us by phone on 1300 123 463 or email on firstname.lastname@example.org and let's start a conversation.