8 Tips On Getting Your Home Loan Approved
It’s no secret that we find ourselves in a tough lending environment. Lending policies have become tighter as Australian Prudential Regulation Authority (APRA) work more closely with the Banks. Also, a more stringent approach to verifying living expenses have been put in place, as a result of the Royal Commission into misconduct in the Banking and Financial Services Industry.
Further changes are expected as the result of this Royal Commission. The final report is due to be submitted to the Governor-General by 1 February 2019. We do not expect that any recommendations contained within this will make obtaining credit easier.
Given the difficulty some people are having in obtaining finance, I thought it would be the perfect opportunity to ask one of the Mortgage Brokers ( Ifraaz Ali - Home Loan Connexion ) that I work closely with, for his top tips for getting your Home Loan approved.
8 tips on getting your Home Loan approved
1. Check your affordability
A main requirement for lenders is your ability to afford a Home Loan which will take into account your current income and employment, as well as your living expenses. You need to be able to show the bank that you have sufficient income to meet your existing debts and expenses and your new loan requirements. You will also need to demonstrate that you are in control of your finances. It is essential that you create an accurate budget, which includes all of your income and expenses so that you can see where your money is going and if you can afford to pay your new Home Loan.
2. Check your credit history
Before making an application, you should check your Credit Report to get an idea of what is on there and if you have any defaults or overdue payments. All lenders will check your Credit Report to ensure that there is nothing on there that concerns them, which includes how many times you have applied for credit and if you have any defaults or court judgements. Each Credit or Loan application you make will show up on your Credit Report so keeping your Credit and Loan applications to a minimum will increase your chances of getting your Home Loan approved.
3. Know your Home Loan options
When it comes to Home Loans, there are literally hundreds of products available out there, so it is important to know what your options are and which products you qualify for. Using a Mortgage Broker is great as they can research the market for you and present you with suitable options for your individual scenario.
4. Payout/minimise liabilities and expenses
Keeping your existing loans and expenses to a minimum is key in applying for a Home Loan as lenders will see every liability that you have, including Credit Cards, Personal Loans, Store Cards and other liabilities or expenses. Minimising your debts will increase your chances of getting your Home Loan Approved.
5. Have a strong savings and repayment History
All banks will want to see that you can save money and pay your existing commitments, so having a strong savings and repayment history will increase your chances of getting your Home Loan approved. This can be done by having a regular savings pattern where you can show that you can save money without spending it and also showing the ability for you to meet your current commitments with no overdue payments. Showing good conduct on all of your accounts will increase your chances of getting your Home Loan Approved.
6. Show employment consistency
One of the big things lenders look for is consistency of employment. If you can show that you have consistency of employment by either staying with an employer for a continuous period of time or having a strong employment history and stability, you will increase your chances of getting your Home loan approved.
7. Don’t hide anything
With the regulations that surround the lending market, it is essential that you disclose all relevant information to your lender when you make an application. If the lender discovers information that has been left out, such as undisclosed liabilities or debts including afterPay, then they are more likely to decline your Home Loan application.
8. Use a Mortgage Broker
A Mortgage broker can do all of the work for you from researching the market to making an application on your behalf and doing all of the leg work while supporting you through the process and ensuring that everything is done with your best interests at heart.