If you’re applying for a home loan, you want to make sure lenders have no reason not to give you the green light. Here are five ways to improve your chances of home loan approval.
1. Have a stable income
Lenders want to see that you have a stable income to give them confidence you’ll be able to afford to repay your loan.
You should be mindful that changing jobs may impact your application. It’s ideal to be in a full-time job for a minimum of six months to improve your chances. This really depends on the lender though, so get in touch to understand how this applies to your situation.
2. Lower your debts
Any personal debts will limit your borrowing capacity, so you should consider paying them off or reducing them.
Lenders also look at your access to money. If you have a credit card with a limit of $10,000, a lender will factor this full amount when working out how much you can borrow – even if you only owe $100.
3. Prove that you are a good saver
Lenders will examine your expenses as part of your application. Even if you receive a financial boost for your deposit, you’ll still need to prove to lenders that you are a diligent saver and manage your money well.
In the three to six months before you apply, you may want to cut back on discretionary spending such as eating out, Uber Eats and excess online shopping. Put aside an amount every month to show a lender you have a history of regular saving.
If you’ve been paying your rent on time, you can use this as evidence of genuine savings.
4. Use a guarantor
Having a family member go guarantor on your loan can increase your chances of a home loan approval.
A guarantor uses the equity in their property as security for your loan. However, it means that if you can’t pay off your loan, your guarantor will become responsible for the debt.
5. Apply with the right lender
Every lender has its own criteria for assessing your mortgage application. It’s a good idea to engage us to do the research into which lenders will view your application favourably.
A final note
If you feel you can’t tick all these boxes, never fear. We can help you put together a compelling application that shows the lender you’ll be a good borrower.
If you’re looking for a home loan, get in touch with us today. We’ll help you put your best foot forward to your preferred lender.