It’s not only high property prices that are making it difficult for lots of people to get home loans. Recent changes to banking policies are also making the process more complex.
That said, there are still things you can do to put yourself ahead of the pack.
Take it away Charles…
Your lender will want to know all about your employment, income, what you own (assets), what you owe (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 lender will want to look into your business finances too. If you’ve just ditched your day job to work on your internet start-up, then you’re amazing and I wish you good luck, but 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.
The following websites offer free credit checks:
- A track record of saving.Show the lender 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 you to get a home loan.
- 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. So you might want to cancel any unnecessary cards or buy now, pay later services like Afterpay, Humm and ZipPay 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. Lenders might be reluctant to grant a 25-year mortgage to someone with 10 years to go before they retire without a clear loan exit strategy
- Honesty. It’s important that you provide full and accurate information to your lender. Remember, they have access to a range of information sources, from your credit history to your payslips and transaction statements.
Our lending experts are available to help talk through your options. Make an appointment with one of our friendly Mobile Lending Managers, who can contact you by phone, email, video call or home visit at a time that suits you. Call us on (08) 8202 7777 or visit us at 400 King William Street, Adelaide between 8am – 5.30pm weekdays or 8am – 2pm Saturdays.
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This article is intended as general information only and has been prepared without taking into account the personal financial situation, objectives or needs of the reader. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs.