Published On: Wed, May 23rd, 2018

Useful ways to boost your chances of home loan approval

Most Australians looking to purchase their first (or new) home knows that securing a home loan is a natural part of the process. The question is how to boost the chances of being approved for the loan.

Home Loan Approval

In this article, we’ll look at some useful ways you can instantly use to improve your chances.

Ways to get approved for that home loan

First off, let’s start with a quick checklist of tips to ensure that your hunt for the right home loan will be quick and easy.

  • Present documents to show that you can repay the home loan
  • Have a strong savings history
  • Assess and improve your credit rating to get lower interest and quicker processing
  • Remove unnecessary financial commitments
  • Don’t apply with multiple lenders at the same time
  • Show that you have a safety net
  • Disclose all information to the lender
  • Maintain stable employment or income

Secure your ability to pay. Showing the lender that you can repay the home is a major requirement for them. While the institution doesn’t need a written budget, they’ll look at and explore your present living expenses as well as financial commitments.

Assess and work on your credit rating. As a borrower, you need to try to constantly check your credit report, which will give you an idea about how many times the report has been accessed before or if you have any negative repayment or defaults recorded. Checking your report lets you know what the lender will see before they investigate, and you’ll have a chance to correct any errors with the bank.

Cut down on unnecessary financial commitments. Personal debt and other financial commitments will impact your application in many ways. For one, too many credit inquiries can be bad to your credit rating. Also, the credit limits on your cards are added to your repayments as if they’re fully drawn.

Create a good savings history. Your ability to manage your expenses and save money is a good sign for lenders. Savings show them that you can meet your loan repayments. Plus, the savings will form part of your contribution to the purchase.

Late or missed repayment of your debts won’t look good when you apply for a home loan. A good history, on the other hand, will show the lender that you are a good risk.

Typically, your savings need to add up to around 5% of the purchase price of the property to meet the savings requirement net of most lenders.

A stable employment or income. Your employment stability is crucial because this is typically the income that will be used for repayments. Having the same job for quite some time is a good sign for lenders. For instance, many lenders prefer their borrowers to be more than six months with their current employers. Be prepared when asked to give more information to prove a stable employment or income history.

End Note

These are the basic ways you can consider when looking to boost your chances of home loan approval. When the time is right, the next step is to find the cheapest home loan available in Australia, of which different loan types are available through providers like Newcastle Permanent. Making an enquiry costs nothing, and you might be surprised to know that it’s possible to get into your home sooner than you though.

Best of luck!