We recently asked Aussies to tell us the main hurdles stopping them from buying a home in the near future, and the overwhelming majority responded with, well, money.
And while there’s no quick fix to magically boosting your bank account, there are ways that you can at least boost your chances of getting approved for a home loan once you are in a more financially stable position.
As well as a few handy tidbits for home loan approval, there’s always a way that you can get your foot in the door of your new home with less money than you might have anticipated, so come with us as we unpack them.
Maintain a steady savings history
To increase the chances of getting the big ol’ green tick of approval, a steady savings history is high on the to-do list.
If you can demonstrate that you have a financially stable history and you can stick to a budget, lenders will be more likely to approve you for a home loan.
To give you the best shot at this, limit unnecessary spending and, where possible, reduce fixed monthly payments (like various subscriptions and expensive phone plans).
Stay on top of your debt
Yes, yes, easier said than done, preaching to the choir.
Sometimes debt can be inevitable – a rogue car repair here, an accidental weekend-long bender there – but it’s important to try to avoid falling behind on your payments.
To keep your credit score in decent shape, try as hard as you can to only make purchases you know you can pay off in the near future. If you have a credit card, treat it like your debit card in the sense that if you don’t have the money in your savings, you don’t have the money to justify using your credit card.
Be entirely honest
It might be a knee-jerk reaction to round up your annual earnings when talking to a lender, but that would be a no-go zone.
Be completely honest when you’re talking to a mortgage broker or lender, as it can end up damaging more than your reputation – it can most certainly be harmful to your overall chance of securing a home loan.
Moving a decimal here and there is just not worth having a slightly better first impression. This is also why it’s important to stay on top of your debt, as you’ll need to be transparent about your history, too.
Before you apply for a home loan, do your research.
It can reflect poorly on you if you have multiple applications in the works, so be careful and thorough before you decide to apply for a home loan.
Speak to professionals and specialists, hunt down the best interest rates online, ask mates and dates (not dates though, maybe family) – just make sure you’ve laid the groundwork before you take the leap.
Consider cheaper areas
If you have your heart set on a penthouse in the middle of Sydney’s CBD on an entry-level salary, you may need to reset that heart.
As house prices continue to soar, your best bet might be looking elsewhere. Whether that’s slightly further out of your current city, or interstate, it really depends on what you’re comfortable with.
In Queensland, for instance, Metricon’s HomeSaver program gives eligible first home buyers the option to put up a $5k deposit in lieu of the standard 10% home deposit, locking in a home and land package with a tailored savings plan.
Given housing prices tend to be cheaper in QLD too, this could definitely be a viable option. I went there a few times, it’s lovely.
The $5k deposit provides you with the services of Metricon’s financial partners to create a savings plan specific to your situation, with incentives like free appliances offered once you’ve reached certain goals. After you’ve reached the final goal, Metricon then works with you to build a brand new abode.
Head here to find a Metricon display near you and chat with their specialist team before you spread your wings and buy a nest all for yourself.Image: Beetlejuice