Your home loan will probably be the largest loan you ever take out. So it pays to get everything in order before you apply for finance. Here are some tips to help you make getting your home loan easier, the first time you apply.
These tips that can help you get your finance approved, first time:
Establish a regular savings pattern.
The bank or financial institution will want to see that you are a regular saver, so make it easy for them. Have a regular transfer on your payday to a savings account. Put ‘House Deposit’ in the reference field of the transfer. Keep it nice and clean to show the bank you’re serious about getting finance for your new home.
Top up your rent payment.
If you’ve estimated your future mortgage repayment at around $2,000 per month and you are currently paying $1,600 per month in rent, put another $400 in a separate account. Label this ‘Future Mortgage Payment’ to prove that you’re capable of meeting your mortgage repayment each month. Not only will this help you save your deposit quicker, it’ll be a smooth transition for you when it comes time to make your first home loan repayment.
Cut the debt.
Nothing turns a bank off faster than high consumer debt repayments. Clear the balance on your credit card and eliminate any other outstanding debts before you apply for your home loan. If you can’t eliminate your debts completely, look at consolidating them into one loan or one credit card at a lower rate of interest.
Set a budget and stick to it.
Budgeting makes life better. But budgeting really proves its worth when applying for a home loan. Being able to demonstrate a streamlined series of automatic payments and direct debits from your account each payday will show you are responsible and organised when it comes to your money. Banks like responsible and organised.
A sure-fire way to have your home loan application declined is to apply for more than you can afford. Think about your current obligations and how they might change in the future. A large mortgage may be manageable if you have two strong incomes and no children. But if you are planning for a family later on, budget for something that you can manage on one income if things change.
There’s more to life than making mortgage payments so factor in enough to have the life you want as well as a house you are comfortable in.
Applying for your home loan needn’t be stressful. By taking the time to get your money sorted before you apply for finance, you’ll be in a much stronger position to be approved for your home loan, first time round.
Put additional money in your savings account labelled Future Mortgage Payment.