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!
- 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.
- 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!
- 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.
- 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.
- 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.
- 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.