Looking to get home loan approval? Start the new year with a new home thanks to our top tips for saving a deposit, paying off debt, checking your credit score and more.
Saving A House Deposit
Saving for a deposit on a home can seem like a daunting task. In most cases, you will require 20 per cent of the purchase price of your new property before you can be considered for a mortgage. In 2022, banks and other lenders are being particularly careful about lending to people who don’t have this deposit ready.
Additionally, you will require additional funds related to purchasing property, such as the amount you pay on stamp duty. This is a government tax on real estate that differs between states.
There’s lots of ways to ramp up your savings efforts to make sure you have enough for your deposit.
Paying Off Debt
To increase your chances of being accepted for a home loan, it’s a good idea to ensure you have as little debt as possible.
Consider any current loans that you have and whether you could potentially pay these out earlier, reduce your repayments, or get rid of the asset all together. For example, you may only have a few thousand dollars remaining on your car loan. Paying this loan out could dramatically increase your chances of gaining loan approval.
Be A Consistent Money Maker
Many people have switched to contract or casual work, rather than being a salaried employee. While this style of working offers greater flexibility, it does have drawbacks when it comes to home loan approval.
Banks prefer applicants with steady incomes over many months. This means that PAYG employees, or people who receive a full-time annual salary with entitlements, are considered safer bets than people who work for themselves or work on a short-term contract basis.
If possible, consider getting a role where you will make the same amount each month and receive consistent pay slips.
Checking Your Credit Score
Before you apply for a home loan, take the time to check your credit score. Simply filling in an online form allows you to check your score for free with any online credit score provider.
Your credit score is another factor that lenders consider when granting home loan approvals. Low credit scores are undesirable, as the risk that you will default on your mortgage is considered higher.
Making sure that bills are paid on time and that you don’t have too much credit card debt or other loans can improve your credit score and make you a more attractive home loan candidate.