Now that you have lodged your home loan application, it’s time to start getting everything ready for your new home; or is it?
The road from home loan pre-approval to approval is a precarious one and borrowers are advised to be careful with their finances in order to avoid rejection.
Here’s what we recommend you do to improve your chances of getting approved.
- Don’t make a career change – Well, at least until your loan application is approved! Lenders look for applicants with a steady employment history and a regular flow of income. Changing jobs can cast doubt on your ability to repay your loan in the eyes of the lender.
- Save the big purchases for later – Even if you can afford that car, buying a high-cost asset could significantly alter your debt-to-income ratio; potentially leading to raised eyebrows from the lenders. Waiting until after approval can increase your chances of getting the loan you want.
- Take a break from credit – Avoid opening new credit cards, or making large purchases on the cards you already have. This includes things like Zip pay and Afterpay too! Lenders pay attention to the amount of money you’re already borrowing, no matter where it’s coming from.
- Avoid overdue payments – Late payments will reflect poorly on your credit score (even that unpaid phone bill can hurt your loan application!). Continue making regular utility payments and keep an eye on anything that can affect your credit rating. This also means paying all your debts, fees and fines on time.
- Get the paperwork right – Paperwork can be tedious, but making sure that everything is accurately filled out and submitted properly and on time will not only make sure you get that loan, but also speed up the process.
- Handle gifts appropriately – If you’re lucky enough to get help from friends or family, don’t let it go to waste by not documenting it correctly. Verify the source of any amount transferred to you that is more than 50% of your monthly income by submitting proper documentation. Un-sourced payments may be viewed as credit by lenders.
- Do the math – There’s more than just the purchase price that your loan will have to cover – if you don’t have enough in your pocket to cover additional costs such as stamp duty, application fees, mortgage insurance etc, make sure your total loan amount will be enough to pay for everything you need. There are many calculators out there to help you accurately predict the real purchase price of your new property.
