Securing a home loan to get into the property game can seem like a daunting prospect at first, but once you decide to take the plunge, excitement will likely become the dominant emotion coursing through your soon-to-be homeowning body.
That being said, buying a home is a very involved process with a lot of moving parts, so you best prepare yourself for quite a journey, a lot of questions and some honest truths about your spending along the way.
To help make things a little easier, here are five things you can do to give yourself a better chance of scoring a home loan. The key to all of them? Making yourself look like a real stand-up candidate ready to take on a big fat loan.
1. Do some research
You don’t have to know the ins and outs of every single little detail, but arming yourself with the basics, at the very least, will make the whole thing a helluva lot easier.
Know what you may need to have ready for the lender, how the general flow of the process works and have an idea of the questions you need to ask before you set up an appointment. It’s not mandatory, but it’ll save you a lot of time and stress.
Having a lot of questions is totally fine, you just have to know which ones to ask. If someone asked you for money to buy a computer and then started asking you questions about TVs, it’s gonna ring some alarm bells, you know?
If you’re reading this, you’re off to a good start. Keep acquiring knowledge, friend.
2. Be organised
In any situation where you’re trying to convince someone to give you something, being organised is paramount. In fact, you can kind of think about getting a home loan a bit like applying for a job — you wanna show the lender you can fill the very important role of paying them back.
There are a heap of things you need to get together for your lender, so having them organised and ready to go from the start will show them that you’re serious and save yourself a whole lot of time when it comes to chatting with your bank or broker.
Here are some things you’ll probably be asked for:
- Photo ID — pretty standard stuff
- Income details — two or three consecutive payslips and details of any other income you cop through shares, etc
- Asset details — got investments, cars or anything else worth a bit of cash? Tally it all up, pal
- Expenses — stuff you’re already paying for like rent, bills, food and all that jazz
- Liabilities — these are other debts you have, whether they be credit cards, car loans, personal loans and so on
3. Watch your spending
It may shock you to learn that banks will really dive into your spending when you apply for a home loan. Everything counts, even your cheeky Uber Eats purchases.
And look, no one can change the past, so don’t sweat a shakey spending record if you have one, just start taking steps towards cleaning it up as early as you can. Every subscription fee that automatically yeets itself out of your account each month and every suss late-night ATM withdrawal will play into your suitability for a home loan, so start being mindful of these things when you start saving for a deposit.
The longer you can show a slick spending history, the better.
4. A good savings history goes a long way
This is pretty self-explanatory, but showing a good record of saving money can go a long way to showing a lender that you’re a reliable person with some bloody self-control.
When you think about it, this part of the process will pretty much take care of itself assuming you’ve saved up a decent deposit. If not, there’s no time like the present — whack a little cash away each week, even if it’s only small amounts. Every little bit counts.
5. Know your limits
Just because you’ve got a hefty deposit and a boat-load of confidence doesn’t mean the bank will lend you $32 million to buy a mansion next door to Malcolm Turnbull. You have to know your limits.
Home loan calculators like this one are a great place to start, but once you’re ready to buy, pre-approval will help determine your official limit.
In a nutshell, pre-approval means that the bank has already agreed to lend you a certain amount of money, providing you can still meet certain conditions when it comes time to actually purchase. In other words, it’s a nice little nod from the bank that allows you to go out and start looking at houses. Pre-approval will give you the right indication of what’s in your budget.
The biggest perk of pre-approval is being able to narrow down your search for a home you can afford. Different lenders will have different offers, so it always pays to shop around. Suncorp, for example, offers pre-approval for free and is valid for three months. If you decide not to lend with them, no sweat, you’re not locked in. Flexibility is always a plus, particularly as we weather uncertain financial waters.
Pre-approvals show up in your credit history though, so don’t make too many in a short period of time.
There you have it, mates. Five ways to help you look like a goddamn angel to lenders. Go forth and become a homeowner.Image: Dogma