Ready to take out a home loan for a new property? It’s not completely straightforward. Not only will your credit history be scrutinised or put under the microscope, but you should also be aware that this is a commitment that will last years into your future. You’ll need to be prepared when it comes to taking out your home loan.
With these tips, you’ll have all the information you need to know when it comes to getting your home loan approved. Because, yes, you’ll face a couple of challenges, but it’s more than possible with the right advice.
Increase your chances of approval
Straight up, here are the top five ways to get your home loan approved.
1. Being aware of your current credit history
Your credit history report is what your lenders will analyse before they approve your home loan. Once you’ve considered how much you can afford, being aware of what’s actually on your current credit history is a useful first step.
You can then use your current credit history report to find out whether you’ve defaulted on any loans in the past, as the report will reveal every past loan application you’ve made. What should you do with your credit history report? Use it to keep track of your loan applications and try to keep the number of loans that you take out low.
2. Make comparisons for your choices
When deciding on which home loan product to go for, you should be aware that there are so many options to choose between. Start by familiarising yourself with your options and then weigh them up. This is important because, although you might not be eligible for one particular type of home loan, you could qualify for a different type.
3. Clear your liabilities and existing loans
There’s no way around these ones. Your lender will be aware of your existing liabilities, and you’ll need to make a good impression. To do it, you’ll have to clear your liabilities and keep the number of loans you take out as low as possible. Some of the liabilities that will harm your chances of being approved for a home loan include credit cards and personal loans.
If your loan history looks good and you can also show that you’re a frugal, expert saver, the likelihood of your home loan being approved will increase.
4. Be organized with all of your documents
Your lender will require certain pieces of evidence to assess your eligibility for a home loan. You’ll need to put all the evidence together and stay organised for this. Which pieces of evidence are needed? You’ll need:
- Payslips that show evidence of your income.
- Documents that show your current liabilities and debts.
- Identification documents.
5. Seek out advice
A final, crucial way to get your home loan approved is to seek and take the advice you’ll get from your mortgage broker. Not only will a mortgage broker support your efforts in getting your loan approved, but they will also be a critical link between you and your lender.
The paperwork and evidence you’ll collect is typically handled by your mortgage broker, and they’ll even help you get the information you need on changes in the market.
Factors that determine the size of a loan
Although there isn’t a cap on how much you can take out for your home loan, there are quite a few things that will determine the size of your home loan. Here are some of the factors that lenders will evaluate that will influence the size of your loan:
- Are you married?
- How long will your home loan last?
- Do you have any dependents (normally, children)?
- What is your career history, and whether you have other sources of income?
- What are your monthly expenses?
- What is your house deposit?
Types of home loans to choose from
We mentioned that there are a few different types of home loans to choose from. For instance, as well as guarantor loans (which involve having your parents provide funds via their own property equity), you might choose to go for a home loan for low incomes, home loans specifically for students, bridging home loans, or home loans designed to help single parents.
Getting your home loan approved: the key points
Although your lender will need to assess your credit history to approve your home loan, don’t panic. There are plenty of ways to increase your chances. Try to:
- Pay off your liabilities
- Compare your options when it comes to choosing a type of home loan, and
- Consult mortgage brokers who will be a great help and reduce the challenges linked to getting your home loan
You’ll get your home loan approved in no time.