For first-time homebuyers, applying for a home loan is understandably quite a daunting prospect and therefore a potential source of stress.
However, with an understanding of what the home loan application process entails and what applicants need to prepare, applying for a home loan needn’t be stressful or a source of concern.
Take note of these ten tips when looking at the borrowing options available to you.
1. Start preparing your documents now, i.e. before you do anything else
There’s a lot of paperwork involved and you’ll also need to save your payslips and evidence of your earnings for at least six months before applying for a home loan.
2. Find out your credit score and look at ways to improve it before applying
Your credit score affects the home loans available to you for better or for worse, so find out your credit score at least six months before applying and look for ways of improving it.
3. Keep your savings growing consistently by making regular deposits
You need to prove your ability to save on a regular basis to lenders. Therefore, start making regular deposits that are larger than what you would make in home loan repayments. This will show your ability to save and meet your repayment obligations.
4. Know which lender to apply to
There are so many lenders to apply to these days and it’s imperative to understand which lender will be the most favourable to apply to. Whilst you may plan on applying to your regular bank – this can prove favourable if you’ve a good track record with them – it might be more advantageous to apply to another lender.
5. Know what you can afford
Understanding how much you can afford to borrow and repay is one of the most important considerations when applying for a home loan. You will most certainly need to create a financial plan and there are a number of online tools that can help you work out how much you can afford to borrow and repay.
6. Know how to present your loan application or enlist the services of a broker
The way that your loan application is presented can make a significant difference to the outcome of your loan application. This is a prominent reason for enlisting the services of a mortgage broker.
7. Ensure you’ve included the required information and haven’t omitted anything
It doesn’t look good if you’re missing information of any kind from your loan application. If you apply for a Smartline home mortgage loan, and therefore with a broker’s assistance, you’re ensuring that nothing has been left out and your application is professional presented.
8. Consider your employment status and avoid changing jobs before applying
Lenders like to see a consistent employment history, so don’t change jobs just before applying for a home loan if at all possible.
9. Avoid taking on new debt
With the exception of small credit card purchases to improve your credit rating before applying for a home loan, avoid taking on new debt.
10. Allow yourself plenty of time
It takes time to research the borrowing options available to you and create a financial plan that helps you to understand how much you can afford to borrow and repay etc., so allow yourself ample time – home loan applications shouldn’t be rushed.
Take note of these ten tips when exploring the borrowing options available to you and remember that as applying for a mortgage to buy a home is the biggest financial commitment you’ll ever make; ensure you’re comfortable with the loan you’re offered before signing on the dotted line.