Following the Reserve Bank of Australia’s decision to cut the official cash rate in February, we’ve seen most major banks reducing the interest rates on a wide range of their home loan products.
So if you’ve been thinking about your dream home for a while, now could be the perfect time to take advantage of the current market conditions and step onto the property ladder.
Of course, purchasing property comes at a cost. When applying for a home there are a few things you should consider.
In recent years for instance, Australia’s lenders have become increasingly selective about who they lend to, tightening the criteria used to judge whether a customer is suitable or not. Lenders are looking for low-risk, reliable borrowers.
When applying for a home loan, it would be a good idea to keep the following factors in mind to ensure a smooth approval process.
Maintain a good savings history
Being able to show your lender you have a good savings history and that you’ve built up a strong deposit over time, will work in your favour. This will help to prove you can maintain your home loan repayments.
Your credit history
Before a lender will approve your home loan, they’ll look at your credit history. Lenders will use a credit report to find out how much credit you currently have, how much of this is available and your past loan applications for credit. They’ll even look at your repayment history on personal loans and bills.
Those with a sound credit history and without a series of unpaid bills will likely have a better chance of having their home loan approved.
Get the necessary documents ready
To help the process run as smoothly as possible and to show your lender you’re serious about your application, get the necessary documents ready beforehand.
It’s wise to have the following documents on-hand: Photo ID, details of income (two recent, consecutive pay slips and information regarding any other income you may receive), details of assets (this includes any investments, superannuation funds and so on), expenses (living expenses and any rental payments you’re making) and details regarding liabilities (credit cards or any other loans).
Your loan applications
When applying for a home loan, it’s wise to get the process right in the first instance and to apply for a loan you can obtain finance through. A mortgage broker can help you with this. If you’ve already applied for 15 different loans with 15 different banks, future lenders may act more cautiously in relation to your application.
Applying for a home loan and buying a property is likely to be one of the biggest financial commitments you’ll make in your life. So, it is important that you out the time to prepare for and do what you can to make the process as smooth as possible.
A mortgage broker can help to step you through the process and make good decisions based on your needs. Call 1300 232 884 for a free, no-obligation discussion today.
Sarah Cannata is the spokesperson for HelpMeChoose.com.au, an online comparison service. Feel free to contact her directly.
*The information provided in this article is intended for an Australian audience. It should not be relied upon for the purposes of entering into any legal or financial commitments.