Imagine the excitement of finding the home of your dreams and feeling like this is where some of your best memories will be born.
Then picture how distraught you would be to hear that your home loan application was declined, and the property is out of reach.
Fortunately, this nightmare doesn’t have to be real. By understanding what not to do and preparing your application properly the process will be a lot smoother with less hold ups, improving your chances of being approved.
1. House shopping before finance
There’s no point fantasising and spending time looking at properties you can’t afford, it usually ends in disappointed. This heart-break can be prevented with a pre-approved loan. By doing so your finance is basically already organised meaning you know exactly what you can afford to purchase and can shop within your budget.
2. Tarnished credit
All lenders have access to your credit file. It is a key consideration and can be a major stumbling block if it contains infringements. So, before you submit your loan application, it makes sense to obtain a copy for yourself first, so you know what the banks will see, what can be cleaned up and if there are any errors to rectify. You can obtain a copy of your credit file from www.mycreditfile.com.au/products-services/my-credit-file
3.Too many applications
Every time you make a home loan application, or any loan application, it’s recorded in your credit file. However, it doesn’t reveal if you were approved or declined. If you have many applications listed it will look more like the latter, which makes lenders feel nervous.
4. Understand if you qualify for the First Home Owners Grant
There are strict criteria which need to be met to be eligible for the First Home Owners Grant, so don’t automatically assume you qualify.
5. Underestimating costs of purchase
As well as the cost of servicing a loan, there are lots of additional costs involved in buying a house that you need to be aware of. For example, settlement costs, applications fees, valuation costs and more which need to be factored in. By getting an idea of what to expect there won’t be any nasty shocks waiting for you along the way.
6. Not exploring all options
There are so many different loan types available such as variable, fixed and split which all come with heaps of added features. So, get to know what they are so you can understand what will work best for you.
7. Taking on more than you can afford
Just because you can service a certain amount doesn’t mean you have to. Make sure you have a buffer factored into your budget so that if rates rise, or your income changes, you can still afford your home loan.
8. Interest rates aren’t everything
The loan with the lowest interest rate isn’t always the best option over the long run. There could be additional fees and charges which could make that option more expensive than one with a higher rate. An effective tool is the comparison rate which factors in extra expenses, providing a greater indication of value.
10. Utilising home loan repayment strategies
Once you have a home, there are a range of simple strategies which could help you pay off your loan sooner – speak to your mortgage broker about options that could work for you.
At Resolve Finance, we want to help you into a new home. We’ll provide guidance along the way to put your home loan application in the best position. Contact us today.