Applying for a Home Loan

With interest rates still near historic lows many people are ready to buy their next home. Buying a home is a big decision and being prepared for what’s to come will help make the process easier.

Here are some things to keep in mind before you apply for your mortgage:

Learn the lingo

There are many different types of mortgages out there and each offers unique benefits. Learn the basics about fixed rates, variable rates, first home owner grants, mortgage insurance. Strive to understand how mortgage interest rates impact your monthly payment.

Determine what you can afford and the like instalments

Use a mortgage calculator to figure out what you can afford. Consider making a higher deposit as it will reduce your mortgage payment.

Work with your Broker

Your broker will guide you through the loan process. Never hesitate to ask questions. The loan process can be complex, but always seek answers to your questions.

Don’t open new accounts

Don’t even apply for new credit cards, mobile service, store accounts or any other lines of credit. Doing so could alter your credit report and have an impact on the type of loan you’ll be able to receive.

Don’t close existing accounts

Keep all your active accounts, even the ones with a $0 balance. Existing accounts maintain a credit history. The longer your credit history, especially with a good payment record, the better. Continue to pay down debt, but don’t close the accounts after they are paid in full.

Don’t change your job

A stable employment history is very important. It is best if you have been employed at the same job for at least two years and preferably longer. If you haven’t, you may still be able to qualify, but stay at your job if you can help it until the loan process is complete.

Pay your bills on time

Avoid making late payments to avoid being denied a home loan or having to pay a higher interest rate. Late payments reduce your credit score, which may have a direct impact on your loan application.

Buying your next home or investment property is an exciting moment in your life. It is also a big decision. If you follow these tips, you can be more prepared to apply, get pre-approved and settle your mortgage. Make sure you ask your lender lots of questions. Strive to understand the process.

Give us a call on 1300 252 088 to find out more.