Once, people asked for a loan armed with not much more than the great Australian dream of owning a home.
For a new generation of aspiring home owners, it’s likely you’ll also need to borrow money to achieve that dream.
But it just got tougher.
A home loan is the biggest financial commitment most people will make.
Any reasonable request for a home loan means making yourself as attractive as possible to lenders; financially attractive that is.
This means doing your homework to prepare. In today’s congested market that can be daunting and confusing.
Lenders pay closer attention to peoples’ capacity to service a home loan over time, making this a key area of preparation.
Our goal is that people can approach lenders with confidence and ready to negotiate. So here are some things you can do to improve the likelihood of getting a home loan.
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Remove current debts
Australians have long-had a love affair with credit.
But existing and overdue debts don’t look good on a home loan application.
It’s important to reduce debt-to-income ratio by having a forensic look at where all your money is going.
Simply, it’s time to stop spending.
This includes credit cards, store cards, personal loans and various other forms of purchase finance people may be accessing.
Pay back anything you owe and cancel these accounts.
Stick to a savings plan
Lenders will look at your savings history and cash position when assessing your capacity to service a home loan.
Saving money may not come naturally to some people, but it’s important to show you are serious about your finances and can stick to a disciplined plan.
Develop and regularly review a household budget to control your living expenses and cut-back on all unnecessary spending.
A great home loan deal means making some sacrifices.
Go large on your deposit
Aim for a cash deposit of at least 20% of your home loan.
The larger the sum of money set-aside for a deposit, the more likely any reasonable request for a home loan can be met.
An added benefit is you’ll avoid the cost of Lenders Mortgage Insurance, which is the premium you’re charged to protect the lender against default.
Clear your credit file
As a rule, potential lenders will go straight to your credit file.
The slightest glitch could block a home loan approval.
There are a number of ways people can pre-check their credit file for any anomalies or inaccuracies, which need to be rectified immediately with the finance provider.
If there are any areas that may impact a home loan application, it’s important to do some legwork and present a plan explaining the situation.
Stable employment
Lenders generally expect that peoples’ salary is the income used to make the repayments on a home loan.
It’s preferred that applicants have been with their current employer for at least 6 months and any probationary period has ended.
It’s accepted that people change jobs, but staying within the industry of most experience is preferred.
Ask for help
Play the field and test-drive your readiness for a home loan, but be careful as multiple applications could damage your future prospects once you’re better prepared.
Sometimes it pays to have a conversation with an independent professional who will listen to your story, help you get prepared for the lender, advise you of your options and anything else you might have missed on your own.
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Summary
There’s never been a better time to negotiate a great deal on a new home loan.
However, whether you’re purchasing your first home, an investment property or refinancing adopting a common-sense approach to asking for money is prudent.
The approval process can seem like climbing the Sydney Harbour Bridge, but bargaining is a two-way street.
Boost your chances by being the most prepared and your request should be safe as houses.
Need a home loan review?
The busy pace of everyday life means it can be difficult to know if you’re getting the best deal from your lender. When it comes to home loans, there’s no such thing as one size fits all.
It pays to talk to people that want to hear your story. Take advantage of our free, no obligation home loan review with one of our experienced, and accredited finance professionals by organising an appointment today.
That’s right. In a refreshing twist you’ll actually talk to a real person.
It’s just one of the many features and benefits included in a tailored home loan solution from Loan Avenue – affordable home loan solutions for everyday Australians like you.
Let us show you. To make an appointment call 1300 56 26 28 or leave a message here.
