For many Australians, houses are not easy to afford. A home mortgage loan might be their only chance to acquire a house for their family. Getting their proposal approved might be the vital key to change their life. If you are one of these people, then you should know how to do it right. Make the most effective effort to avoid the bank’s rejection.
Here are some of what you can do to increase your chance of acquiring approval:
Check Your Eligibility
Eligibility is not bargainable. Either you meet the criteria or you have zero chance of getting a loan. In Australia, you can propose a home mortgage loan if you are:
● 18 years old or older
● Hold an Australian or NZ citizenship, an Australian permanent residency, or a certain eligible visa
● Currently living in Australia
● Having regular income for quite some time
● Having good credit ratings
● Currently not on a process of bankruptcy
Get A Pre-Approval Statement
Pre-approval is an official letter from a lender that states how much money you can get on the loan, the interest rate, and all the information regarding the loan the bank could give you. This letter can ease up your mortgage process because the money would be ready soon after you propose.
To get this letter, you need to meet up with a bank’s representative and submit your financial situation. The bank will do an early checking and measure your financial ability to afford the loan.
Acquiring a pre-approval is very sensible to do. By knowing your exact limit, you can look out only for the houses you can afford.
Get Your Credit Records Clean
Banks will not lend you any money you can’t afford to pay back. So they will check on the credit records and see how well you paid them all. They will check both the ongoing and past credit schemes.
It is fine to have many credit histories as long as you paid everything on time with the money you regularly earn. If you are struggling to pay off multiple debts, try consolidating them. Manage your cash flow better so you can allocate more money to settle all your debts. However, never make a new debt if you barely could repay the old ones.
Have A Steady Income
Without a steady income, your banks would wonder how are you going to make your payment on time every month. So if you are an employee, stay at a company for at least 6-12 months. If you consider moving on to another company, have at least some savings to make sure you can repay the loan during the gap in employment.
Businessmen can get their mortgage loan approved if they can manage to have stable earnings for certain periods. But freelance workers are very unlikely to get a mortgage loan approval.
Manage A Healthy Cash Flow
Banks will see how do you spend your money to measure how capable are you in repaying the loan. Healthy cash flow should include paying your bills on time, allocate enough money for savings, and spend your income at a reasonable rate.
Avoid living paycheck to paycheck because that means you can’t afford any more extra outcomes such as loan repayment or emergency spending. It would be much better if you have separate savings such as emergency funds, your children’s education funds, etc.
Get Your Down Payment Ready
Proposing a home mortgage loan without having some hard cash ready is like quickening your way for a rejection. Because every home mortgage loan would need a down payment. And your cash readiness is one of the vital things a bank would consider when reviewing your proposal.
The minimum amount of down payment required may vary, depending on the bank’s policy and your financial situation. Apart from that, the bigger your payment, the less the loan you need. Hence, you can have shorter timespan or lower instalment.
Survey on Multiple Banks
What many Australians fail to realize is that different banks may give you different feedback regarding your home mortgage loan proposal. Normally, you can get a high credit limit on Bank X, a low credit limit on Bank Z while getting completely rejected by Bank A.
We have a Mortgage calculator on our website. The tool can help you figure out how much money you can have on your loan, based on your current financial situation. This number is not final because the result may change after the bank checking. But at least you can get a brief picture on which bank could grant your loan proposal.
Propose on Your Level
By knowing your financial status as well as your down payment readiness, you can figure out your possible loan model from the loan calculator. If you make a home mortgage loan proposal on your level, the bank would likely approve.
If it turns out that you may need a higher loan than your limit, then you need to figure out something. Try talking to the bank’s representative to see if there is something you can work on. Other possible solutions are getting extra income for higher down payment or getting a less expensive house to purchase.
Be Honest with Your Situation
The bank will process your proposal by doing thorough checking about your financial condition. It is useless to try hiding out some spending because the banks will find that out anyway. Getting caught lying might just make the bank thinks you are not a trustworthy loaner.
This is why it is vital to always maintain a healthy financial history. Manipulating it will not work either as it instead might get you caught by the authorities for fraud.
Many Australian citizens apply for a loan and gamble their luck on the approval. This is not a smart move for your future. A brief knowledge and sufficient preparation are things matter. It is the most effective tricks to raise your odds of getting your home mortgage loan approved.
