For the majority of people, a home loan is the biggest financial commitment they will make during their lifetime. Such an obligation requires painstaking and meticulous planning, but with the right resources and careful preparation, you shouldn’t need to stress. Here are a few tips to help you make the home loan application a breeze.
Prepare your credit report
Before anything, you will need to ensure that your finances are in order. Sit down and assess your credit report – this includes your personal history of all your credit accounts (cards, loans, mobile phone plans etc.), and all their associated repayment histories. These are the first things that your lender will be looking at when you apply for a home loan.
Dispute inaccuracies in your credit report
Misinformation and discrepancies will hurt your credit score and may cause your application to be denied, so consider speaking to a credit professional to help you dispute these issues.
Pay off delinquencies
Mortgage lenders will be assessing your ability to pay off debts on time. So, if you have anything outstanding, clear them up as soon as you are able to. If for any reason you have recently made a late payment or have paid off any delinquencies, it is probably a wise idea to wait at least 6 months before applying for a home loan.
Hold on to your documents
When applying for a home loan, the more information you can provide, the better your chances of having your home loan approved. Buy a handy file to store all your documents including:
- Statements of all previous loans and credit cards
- Payslips – last 2 at least
- Tax returns
- PAYG summaries
- Most recent personal bank statement
- Anything else you think is relevant
Home Loan Deposit size
Lenders always give preference to those who put down larger deposits. Generally, they consider loans for 80% of the property value to be ‘safe’. Keep in mind that they may be willing to stray from their normal lending policy, if you are willing to put down a large deposit. Borrowing less than 80% also means you can also be exempted from the Lenders Mortgage Insurance (a one-off fee that can be quite strict when assessing your home loan).
If you’d like to find out more about how to prepare for your home loan application, feel free to drop us a line.