Your First Home Loan – How Do You Prepare For Your Loan Application

appliHow To Eliminate The Guesswork From The Process?

It is very exciting for all first time home buyers to purchase their first homes.  Home ownership for most is the Australian dream come true.  So if you are planning to apply for your very first home loan, be sure to take all of the following steps to obtain the best terms and secure your mortgage loan.

Have You Recently Reviewed Your Credit Score? 

Your credit score is vital.  Recently the rules have changed and what was thought to be excellent credit in the past is considered just to be average now.  To qualify for the lowest possible interest rate on whatever kind of loan you apply for, you would make sure that your credit score is at least 740.  There are several different methods you can use to increase your credit score quickly.  If you are credit impaired it can be a superb idea to consult with a credit repair specialist.

Do You Move Frequently? 

Other helpful factors for making improvements to your credit score include longevity of employment and residence. So if a lender sees you change jobs frequently or move often, you will be given a lower credit score.  Some other factors that may reduce your credit score include having too many credit enquiries listed on your credit report within a short period.  Others include having too many credit cards or personal loans.

                                 

Do You Pay Your Bills On Time?

In today’s credit world, lenders can see whether you’ve gone over your limit on your credit cards or been late on any of your loan repayments.

In Australia, a credit reporting system was recently put in place that enables lenders to subscribe to this kind of service.  What that means is that any lender who is considering loan you money can access this system to ensure that you will have the ability to pay them back.

How Much Is Your Deposit?

You should prepare yourself to put as large a down payment as you possibly can.  The larger the down payment you can put down, the higher your chances of approval will be, and the lower your interest rate will also be.  You should, of course, have a nest egg set aside as well.  If you can have six months worth of mortgage payments saved in the bank, that can help you get through a health issue or job loss, in case either one of these arise. Nonetheless, don’t despair if you can’t get the ideal home loan the low interest rate you were hoping for. It’s probably better to get into the market than stay out of it waiting for the ideal mortgage conditions. In many ideal residential locations property prices continue to increase. So, it may be better to buy now and look at refinancing your loan to a better deal in a couple of years.

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Do You Send More Money Than You Earn?

Finally, pay close attention to what your debt to income ratio is.  Lenders look at this to determine the amount of money you earn each month, compared with the amount you owe each month.  The higher your income is and the lower your debt is, the more lenders will be attracted to you as a borrower.

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