The majority of home loan lenders now require a deposit of between 5 and 10 per cent, with many requesting evidence that the deposit was saved overtime, which is commonly referred to as ‘genuine savings’. For many would-be home buyers these changes are disappointing as many have the income to service a mortgage, but just don’t have the cash for the deposit. While your new home may now be a little harder to secure, don’t despair. Here are some tips to help you enter the market sooner.
Start a regular savings pattern now, banks will look for a good savings history; it shows that you’re able to manage your money.
Lenders are implementing tougher requirements when it comes to lending, this might include looking deeper into your employment history (i.e. how long you’ve held a position for); so if you have a good job, stick with it.
Home loan borrowing power
Boost your home loan borrowing power by eliminating other debts and liabilities, pay off any outstanding loans, reduce and eliminate credit card debts and reduce credit card and overdraft limits; even if you’re not using them, high limits will reduce your borrowing power.
Documentation is also more important, be sure to have all supporting documents ready to fasten the process; this includes payslips, PAYG Summary’s and savings statements.
Don’t seek a loan size you know you cannot afford without placing yourself into financial hardship.
Use a professional
Contact a mortgage broker, a mortgage broker will be able to assess your borrowing capacity as well as direct you to the appropriate lender and home loan product type to suit your needs.