As a potential buyer, getting a pre approved home loan can seem scary and overcomplicated, especially when you’re not sure of your bank’s criteria for lending money. As a rule of thumb, banks are, by and large, conservative, and they may not want to take a chance on someone who is perceived as a financial risk.
Lendi, Australia’s number 1 online home loan platform, has put together 7 simple steps to help maximise your chances of being approved for a loan.
Before loaning you large sums of money, the lenders will pull up your credit file to see if you’re reliable when it comes to paying your bills on time. To avoid appearing unreliable, consider using a debit card instead of a credit card, to avoid incurring any debt and paying unnecessary interest. Paying things like your phone and electricity bills on time will also help improve your credit rating.
Most home buyers will need to spend time saving up prior to purchasing a house. Many buyers have regular system, like putting a certain portion of their salary into a separate savings account each month.
If you haven’t started saving, now is as good a time as any to start. Some banks even have a genuine savings policy. For example, Westpac requires a minimum 5% savings held over 3 months, to make someone eligible for pre approved home loan.
Before you even consider applying for a home loan, first check your credit score. Once you have received your copy, check that all the information is accurate. If it isn’t, contact your bank to remedy this. To clean up your file even further pay off any outstanding debts, and if need be, you can appeal to scratch any unfair blemishes off your credit score.
Money management should be at the top of your agenda, as lenders can ask to see recent bank statements as proof that you can live within your means and are able to budget successfully.
When considering to provide you with a pre approved home loan, lenders will want copies of around 3-6 months of your payslips, so having a steady job and income will make lenders look upon you favourably, as you are less of a risk than someone without a job.
While it is important to shop around, don’t make too many loan applications at various lenders as these could form a red flag on your credit portfolio. Instead, do your research prior to applying for a loan.
While you may have your eye on a particular dream home, think with your head, not your heart. Buy the house that suits your lifestyle and income, not the one that suits the lifestyle we all wish we had. Who knows, maybe if you follow these 7 steps to the letter that dream can be yours one day.
Talk to Lendi’s Home Loan Specialists to find the right loan for you.