Get Home Loan Application Ready with Us
Navigating your first home loan can be a daunting experience – and it can take longer than necessary if you don’t go in with some basic knowledge about your finances or what you’re after. At Select, we want to help you improve your chances of getting a fast approval for your first home loan application.
With the right preparation, a realistic understanding of your financial position and some good ol’ professional advice from your broker, you can position yourself as an attractive first home loan customer and get your loan approved in no time.
Dust off and clean up your credit
When applying for your first home loan, it’s crucial to appear creditworthy in the eyes of the lender. Having a clear understanding of your credit history and getting it up to scratch is integral to being approved for further finance – a bad credit history is a sure way to have your home loan rejected by the lender.
Get a hold of your credit file – determine where it may look questionable (if at all). Be honest and upfront with your lender about why any faults may have occurred, how you remedied the situation and steps you’ve taken to make sure it hasn’t happened again.
Check and re-check your financial position
There is nothing more attractive to a bank than a new customer who has a clear understanding and knowledge of their financial situation. This means that you should self-assess your finances before making an application and get to know where your money goes. Your financial position determines the amount you can borrow and with how much ease you can make repayments for specific products.
Construct a spreadsheet in Excel and list your income, expenses, assets and liabilities. Be honest with yourself about your everyday expenditure and commitments – this will make it easier for you down the track to determine how well you’ll be able to juggle your repayments. Your home loan repayments should equate to no more than a third of your income.
Your broker will help you to assess your financial situation, so don’t discount their time or advice.
Have a decent deposit ready
When applying for a home loan, the larger the deposit, the cheaper the loan in the long run. While some lenders might need as little as a 5% deposit and sometimes less, a decent sized deposit will show that you’re financially disciplined and responsible to a lender. We recommend having a 20% deposit saved up so you can avoid paying Lender’s Mortgage Insurance (LMI).
When saving for the deposit, factor in additional fees such as conveyancing, stamp duty and removalists. Even if you don’t have a deposit, it doesn’t mean you can’t get a loan. Your broker can help find you the right product to suit your circumstances.
Gather your documents
Make sure you have all essential documents on hand so that your application can be processed and accepted swiftly.
These documents may include:
• Recent payslips as evidence of income
• Driver’s licence and passport
• Bank account statements
• Credit card statements
• A letter of reference from your employer if you’ve been employed only a short time
• Your monthly income and cash flow in the form of your last two tax returns (if you’re self-employed)
Eligibility for grants/government concessions
If you’re a first-time buyer, you may be eligible for multiple grants that can help you purchase your first property. This may include the First Home Owner Grant (FHOG) and Duty Concession.
A mortgage broker will assess your eligibility for any grants you may be unaware of.
For young people, the easiest way to get onto the property ladder sooner is when parents offer a monetary gift or their own property as security to secure a loan for their children. To find out more about the guarantor loan, visit our previous post here.
Remember, a good mortgage broker will position you as an attractive borrower to lenders while finding you the best home loan to suit your needs.
At Select, we make finance simple. Contact one of our brokers today on (08) 9417 3399 to get started on an application.