4 tips for upgraders as the property market lifts
With interest rates having fallen to record lows in 2020, some households have increased free cashflow and a…
Getting a home loan can be challenging, especially if you’re new to the property market. You might have trouble getting approval from your bank or you may be unable to meet one or more of the lender’s criteria. Even for those who do manage to get approved, it can take weeks to complete all of the necessary paperwork and meet all their requirements.
So how can you streamline the process and secure a home loan quickly? Here are some tips that will make it much easier for you to get a home loan in Australia.
Research your lenders in advance
One of the best things you can do is research the lenders you might use to get a home loan in advance. This will help you to understand their requirements and get the paperwork in order before you start the process. It will also make it easier for you to find lenders that are a good fit for your situation.
Some lenders specialize in specific types of loans, such as those for first-time buyers, self-employed people, or people who have poor credit ratings. Knowing what your lenders’ requirements are ahead of time will help you to find a lender and a home loan that’s right for your situation. Of course, many of us don’t know where to start, and this is where a licensed mortgage broker can help.
Because mortgage brokers are in the market all the time, they know where you should start looking and will be across all of the latest developments in the lending space.
Plan for the deposit you’ll need
One of the first things lenders will look at is your deposit. They’ll want to know how much money you have available to put towards your home loan.
Ideally, you should have at least 20% of the total price of the home in your bank account. If you’re buying a more expensive property, you may need to save more. There are some lenders who will accept a lower deposit, of course.
This may well be worth looking at, especially in a rising market, if it means you can get into the market sooner. However, this will often result in a higher interest rate on your loan, and may also result in some lender’s mortgage insurance (LMI).
If you don’t have enough saved for a large deposit, you can sometimes also consider getting a loan with a guarantor. A guarantor is effectively someone who promises to repay your loan if you can’t. This route definitely isn’t for everyone, so speak to a financial advisor if you aren’t sure.
Be honest about your income and debts
Different types of home loans have different requirements for your income and your debts. In order to get approval for a home loan, lenders will look at your income and debts, such as student loans, credit card bills, car loans, for example, or other personal debts.
Lenders will want to know that you have enough money coming in each month to make all of your repayments comfortably.
If you have a large amount of debt, it can be difficult to get a home loan. You might still be able to get approval for a loan if you have a clear plan for how to pay off your debts, but it will be a more challenging process.
Conclusion
Getting a home loan can be a confusing and difficult process. It’s important to prepare for the process in advance. It’s also important to understand that getting a home loan can be a complex process. There is no one “correct” way to go about it.
Every lender has different requirements and every person has their own unique circumstances.
What works for one person might not work for you. The most important thing is to stay focused on your goals. There is light at the end of the tunnel. If you follow these tips, you’ll be well on your way to getting a home loan of your own.