Improve your chances of getting the best home loan deal

A mortgage is usually the biggest investment a person is likely to make in their life. It can be a long, stressful process so having a good understanding and preparation is of the utmost importance. By satisfying the requirements lenders look for can significantly improve your chances of getting the best home loan deal, saving you tens of thousands of dollars.

You should have an ultimate goal when applying for a home loan. To achieve your desired outcome you will need to make yourself a budget and adhere to it for at least six months. You will also be required to save a deposit, the more the better, so try reduce your weekly expenses. This will also help you when applying as lenders will want to know your gross income as well as your financial and living expenses to gauge your disposable income. The more accurate they are the more trusting lenders will behave towards you. To help you budget and get an idea of how much you will need use our online calculator to see what you need to save and how much the repayments will be http://rdfinance.com.au/rate-calculator/.

Lenders love consistency whether it is in savings, income or rent. They want to see evidence of good financial management and steady savings, rather than windfalls, so use a separate savings account to make regular deposits and few withdrawals. They are also generally less comfortable lending to someone who has had many job changes or long gaps between employment so provide evidence that you have a stable income stream. If you do change jobs apply for your mortgage before changing employers or starting a business.

Know that most lenders credit-score you to get an idea of how much risk you pose. It is a must that you minimise credit enquiries, job changes and changes of address. Next year Australia gets a credit reporting system where creditors disclose late payments, not just defaults. Lower your limits on credit cards as every $1 of credit card limit stops you borrowing up to $5 of home loan. Reduce credit cards to one, and lower that card’s limit to what you use. Pay-off and cancel the credit card if you can. Also stop applying for credit/store cards as it suggests you live beyond your means.

Ensure your bank accounts are in order, meaning no late payments, over-limits or overdraws. Lenders generally check or require account statements for the last three to six months when assessing your loan application. Know your credit report because most lenders credit-score you on the Veda system which shows your current and past credit activity. Your credit score is affected by the number of mortgages you submit for so don’t apply for too many.

Whatever your situation do not lie to lenders! This is one of the worst things to do as it will come back to bite you and could land you in serious trouble.

Remember that home loans are a long term debt so don’t rush and get your preparation spot on. Make sure you save to have a deposit big enough to have 20 per cent equity, cover stamp duty as well as conveyancing. Keep everything nice and consistent and you will increase your chances of getting the right deal for you.

Our greatest recommendation is to talk to a broker. If you’re worried about your credit score and serviceability, a broker can get you prepared pre-application. They will also get you the best deal at no extra cost so call (08) 9289 7777 to speak with an expert.