Most Australians dream of owning their own home, but it isn't always easy with average house prices in Sydney and Melbourne coming in at $950,000 and $710,000. Getting that all important home loan approval is part of the deal of owning a home, so follow these golden rules to strengthen your chances of getting approved.
Demonstrate Your Loan Repayment Capability
Every lender wants to know that you're able to repay your mortgage payments before you get approved. This includes accessing information about your current lifestyle and ongoing commitments. For instance, if you're paying back loans for cars and education already, your lender will want to know that your income is sufficient to handle the additional mortgage repayments before approving your application. If you don't have too many loans and lifestyle-related expenses, you're more likely to get a home loan from your desired lender, especially if other things you had to finance were eventually repaid in good time.
Get A Copy Of Your Credit History Before Filing An Application
Getting a copy of your credit report will help you better understand your financial position as it contains information about any payment defaults and negative history. While in most cases, payment defaults are accurate, there are instances where the information has been misreported to the credit bureau. Checking this report in advance will help you correct any mistakes before potential lenders access it.
You can get a copy of your report by contacting a credit reporting body (CRB) after providing sufficient personal information. You can generally request for a free copy of your credit report once a year or in certain special circumstances. The report must reach you within 10 days of receiving your request. Immediate access to your report is also available for a small fee.
Make Sure You Have Adequate Savings In Your Bank Account
Not only do you need to demonstrate your repayment ability through income and prior debt information, but you also need to show adequate savings in your bank account to get approved for a home loan. Sufficient savings will demonstrate your ability to pay for the house deposit, while convincing your lender that you're responsible. More savings means less borrowing, which brings down your lender's risk. Many lenders also offer more competitive interest rates to people who can show adequate savings in their bank accounts.
Getting approved for a loan is exciting because it means that you're one step closer to becoming a homeowner; follow these steps to start that process.