It’s no secret; getting approved for a mortgage these days is getting harder and harder. Banks are cracking down on home loan approvals and first home buyers need to do everything they can to watch every dollar being spent and minimise the chances of a rejection. Luckily, we’ve put together some handy home loan application tips to help improve your chances of approval and achieve the dream of owning your own home.
1. Downsize Your Expenses
It’s a good idea to rein in the unnecessary expenses 6 months prior to applying for your loan. This is because lenders will be looking at your previous 3 months of expenses in great detail to determine if there are any living expenses that can potentially hinder your ability to repay the loan. This can be anything from cutting down on coffee to reducing those Afterpay repayments!
2. Improve Your Credit Rating
Typically, you’ll need a credit score of at least 620, possibly 750. Be prepared to disclose everything about your finances, including expenses, debts, income, investments and savings. Fix any credit issues or errors before application and avoid any late repayments and arrears. A clean credit history greatly improves your chances of getting a home loan.
3. Show That You Can Save and Manage Money
Having a healthy amount of savings in the bank is a great way to prove that you can save and manage your money. Generally, banks want to see at least 20% of the total property price saved up.
4. Make A Higher Down Payment
If possible, put down a greater deposit than 20%. The more you can put down as a down payment, the more you can lower your Loan to Value ratio and make your application less risky for the lender.
5. Consider a Joint Home Loan
If you have a low credit score and unstable employment, you can improve your chances of home loan approval by applying for a joint home loan with a co-applicant. The best choice is a family member with a stable income that will boost your eligibility and increase the amount of money you can loan.
6. Choose A Longer Repayment
While a short repayment term may seem like the best way to own your home sooner, sometimes the best option is to go for a longer loan tenure. This means more interest paid over time but it may also make you more eligible for a loan of a higher amount.
7. Stick With Your Job
Lenders want to see that you have been in the same employment for at least 6 months. This proves that you can hold down a job and will be able to make repayments on time.
Improve Your Chances of Home Loan Approval With Aquallis Finance
Need more home loan application tips? Consult a mortgage broker! Aquallis Finance can advise all types of borrowers, from your first home to investors. We compare what lenders have to offer and have a thorough understanding of updated policies to ensure you have the best chance possible of approval. Let us find the right home loan for you – give us a call today to discuss your needs.