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6 tips for getting your home loan approved as a first home buyer

First job, first car, first love; each of these are sentimental milestones most of us will experience at some point in our lives. Although, unlike your after-school check-out shifts or second-hand Hyundai Getz, scoring your first home is a little more complex.

However, we have good news. We’ve provided you with six tips for improving your eligibility for a home loan, so you can tick off another milestone and move into your first home!

  1. Plan ahead

Banks are looking more closely at how you spend your money, making it particularly important to be conscious about how you spend your money in the lead up to your loan application. ‘Red flags’ for lenders include overspending on ‘non-essential’ items like dining out, shopping etc.

We recommend reviewing your spending 6 to 12 months prior to applying for a home loan to show banks you can save by allocating a responsible budget to entertainment and luxuries per week.

Simply keeping a ledger or downloading a budgeting app can help keep you accountable. If you’re ready to get serious, speak to us about setting an entertainment budget based on your earnings 6-months prior to your home loan application.

  1. The bigger, the better

The bigger your deposit, the better chance you have of getting a loan approved. Off the back of our last point stressing the merit of planning, could you benefit from pushing back moving for an extra 6 months to accumulate more savings, or are there any sacrifices you could make to feed your home deposit sum?

Not only will this increase your chances of approval, it will reduce your overall loan amount – think of it as a short-term sacrifice for long term rewards!

  1. Remove unnecessary financial commitments

In line with being more conscientious with your budgeting, it is particularly important to be mindful of automated costs deducting your account in preparation for home loan application.

Routine expenditures like streaming services, Afterpay, unused gym memberships and other subscriptions may seem harmless, but may indeed hinder your chances of loan approval. An easy way to assess your monthly costs in to print out your bank statement and go to town with the highlighter.

  1. Prove job security.

Banks don’t like to take risks. If you have recently started a new job, while it may well be stable, having an absolute minimum of 3 months employment at the same company can prove stability in income. If you are concerned your current employment situation may affect your application, have a chat with us about your options.

  1. Pre-approved loan

Getting your loan pre-approved means getting your finances arranged before you make an offer on a property, allowing you to determine exactly how much you can borrow before you buy your home.

Not only does a pre-approved loan provide a level of certainty about the value of property you can buy, real estate agents actually prefer dealing with buyers who are pre-approved, giving you the upper hand against competing buyers and confidence in approaching your market debut.

  1. Brokers over banks

A good mortgage broker has your best interest at heart, meaning they aren’t going to refer you to a lender that will most likely decline your loan application. If you were to apply for a home loan through a bank, you are limited to their set criteria, as opposed to a broker with access to a range of lenders with varying specifications.

Brokers are able to refer you to a lender who best suits your circumstances, thus improving your approval rate. In addition, going through a broker offers better protection for your credit history, with each knock back earning you a black mark against your name, so you want to ensure you are completely confident when you finally decide to submit your request.

Now you’ve made your checklist, what’s next?

To start your first home ownership journey off on the right foot, book a coffee and chat with Dean today to ensure you’re on the right path to avoid disappointment down the track. To get in touch, phone Dean on 0413 766 456.

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The Perks of a Pre-Approved Loan

It’s no secret the home buyer’s journey involves a fair amount of decision making. From choosing a location to determining the number of bedrooms, the process can be overwhelming, especially for those entering the market for the first time. This is where applying for a pre-approved loan can be of advantage – a lending option giving prospective buyers a sense of clarity in terms of what they can realistically afford.

 

What is a pre-approved loan?

To put it simply, getting your loan pre-approved means getting your finances arranged before you make an offer on a property, allowing you to determine exactly how much you can borrow before you buy your home.

 

Benefits of a pre-approved loan.

Not only does a pre-approved loan provide a level of certainty about the value of property you can buy, real estate agents actually prefer dealing with buyers who are pre-approved, giving you the upper hand against competing buyers. Plus, determining what you can afford prior to house hunting will save you the potential heartbreak of falling in love with a home that is out of your budget.

 

How do I apply for a pre-approved loan?

With the help of your broker, the application process for a pre-approved loan is no different to that of a regular loan. All the same documentation that would be required for a full loan application is needed and once approved, all you need to do is find your home.

 

Is there a downside to pre-approved loans?

There’s none, really. The Finance Agency’s Dean Nicolaou says it is a common misconception that a pre-approved loan will impact negatively on your credit score, so you should dismiss this claim. Although it may be noted on your credit file, the only perceived negative could be that the amount you are applying for is less then you thought you could borrow (although in many cases you may be surprised to know many clients find they can actually borrow more than they thought possible).

 

Overall, a pre-approved loan serves as an effective tool for refining your property search, particularly for first home buyers or those looking to invest. By giving you a dollar amount to work with, and the reassurance of approved finance, all that’s left is the house hunting!

If you are considering applying for a pre-approved home loan, give Dean a call on 0413 766 456 and he’d love to help you get started.

 

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Smart Tips For Paying Off Your Home Loan Sooner

It’s the great Australian dream to live mortgage free, yet for many Aussie families, this is considered an unattainable goal – or at least one they won’t achieve until they’re old and grey.

What if we told you paying off your mortgage doesn’t have to wait until you’re eligible for the old age pension? Australian home loan interest rates remain at historic lows, meaning you could be enjoying the freedom of having no mortgage in no time by following a few simple tips.

Get your note pads ready because we’ve complied our six tips for paying off your home loan sooner.

 

  1. Higher Repayments

An obvious, yet effective, approach. Can you sacrifice the Friday night take-out spend for a reduced mortgage balance? You will be surprised how much an extra $50 – $100 a fortnight/month will impact the term of your loan.

  1. Weekly or Fortnightly Repayments

Put simply: making more frequent repayments. Making extra repayments can take years – and thousands – off your loan. This is an avenue we strongly suggest exploring. Our team would be more than happy to discuss setting a realistic repayment budget if you are considering switching to a weekly or fortnightly plan.

  1. Interest Offset Accounts

An offset account is a savings account or transaction account linked to an eligible home or investment loan. The money you have in this account could offset the amount you owe on that loan, and you’ll only be charged the interest on the difference, so you Save on interest charges, which helps you pay your loan off sooner. Wages and income can also be deposited to this account and they generally only comply with variable rate loans. Still confused? We’d be happy to talk to you and explain how it works.

  1. Avoid Rate Cutting

When lenders reduce their interest rate to coincide with a fall in official rates, consumers often think to reduce their loan repayment. Instead, we suggest maintaining your original repayment, so you are still able to achieve a shorter loan term and save on interest. 

  1. Pay both Principal and Interest

The lower repayments that come with an interest-only loan may seem like a good idea in the short term, but in the long run, it could end up costing you more because you’re only paying the interest initially and not reducing any of the actual mortgage. We would be happy to discuss these options with you.

  1. Get a Split Loan

Unfortunately, this doesn’t mean splitting your loan in half and forgetting about the rest. Split loans allow you to divide your mortgage with variable and fixed interest rates. For example, if you had a $500,000 mortgage, you can choose to “fix” the rate for $450,000 of the loan and the remaining $50,000 can be on a variable interest rate. This enables you to secure a low fixed rate for the main portion of your loan, whilst the variable allows you to make extra repayments and offset this interest rate with your savings.

We hope these tips have inspired you to make an effort to pay off your loan sooner than anticipated! Get in touch with our team and let’s make this dream a reality.