Boost Your Chances of Getting a Home Loan
Last updated on December 19th, 2022
Are there ways to boost your chances of getting a home loan in Australia?
Getting a home loan can be complex if you tried to go it alone without a mortgage broker. A lot of the decision whether or not the lender provides you with a mortgage or not comes down to the credit assessment. The credit assessment is in some ways your financial resume that you present to the lender. Like any resume and job application, the goal is to present yourself as the best candidate. There are no magic tricks or fabrication, however a mortgage broker can help you put your best foot forward.
Here are 6 ways you can boost your chances of getting a home loan:
- Improve your credit score: Your credit score is a key factor that lenders consider when evaluating your home loan application. A high credit score indicates to lenders that you are a reliable borrower and are more likely to repay your loan on time. To improve your credit score, make sure to pay all of your bills and debts on time, reduce your credit card balances, and avoid applying for new credit unnecessarily.
- Save for a larger down payment: The larger the down payment you can make, the less risky you will be seen as a borrower. This is because a larger down payment reduces the size of the loan you need to borrow and reduces the lender's risk. Aim to save at least a 20% down payment, as this will also help you avoid paying lender's mortgage insurance, which can add to the overall cost of your loan.
- Get pre-approved for a home loan: Before you start looking for a home, it can be helpful to get pre-approved for a home loan. This will give you an idea of how much you can borrow and what your monthly repayments will be. It can also make you a more attractive buyer to sellers, as they will know that you are able to secure financing. To get pre-approved, you will need to provide the lender with information about your income, assets, and debts.
- Be realistic about what you can afford: It is important to be realistic about what you can afford when it comes to buying a home. Consider not only the purchase price of the home, but also the ongoing costs of owning a home, such as property taxes, insurance, and maintenance. Make sure to create a budget and stick to it to avoid overcommitting and getting into financial trouble.
- Consider alternative financing options: If you are having trouble getting approved for a traditional home loan, there are alternative financing options available. These options may include shared equity schemes, where you share ownership of the home with a lender or third party, or rent-to-buy arrangements, where you rent the home with the option to purchase it at a later date.
- Seek professional advice: If you are struggling to get approved for a home loan, it can be helpful to seek professional advice. A financial planner or mortgage broker can review your situation and help you come up with a plan to improve your chances of getting approved. They can also help you shop around for the best home loan deal and negotiate with lenders on your behalf.
In conclusion, there are several steps you can take to boost your chances of getting a home loan in Australia. By improving your credit score, saving for a larger down payment, getting pre-approved, being realistic about what you can afford, considering alternative financing options, and seeking professional advice, you can increase your chances of securing financing for your dream home.
