It’s hard not to feel overwhelmed as a first time buyer in the current Australian housing market. In this day and age, an enormous amount of preparation and analysis goes into assessing and approving buyers for home loans in Australia. For those who aren’t familiar with the process, this can be a daunting process. If you’re just dipping your toes in the market and loan process for the first time, this guide can help you improve your odds for approval.
These are seven factors lenders examine before determining how to handle a borrower’s application for home loans in Australia.
1. Size of deposit. As a rule of thumb, it’s a good idea to offer the largest deposit possible on the home in question. When a lender sees a large deposit offer, they assess the borrower at a lower risk. This increases your odds for approval.
2. Financial situation. Lenders are also especially interested in how you earn money, and whether you’ll be able to consistently make payments on your mortgage over a long term. Self-employed borrowers tend to be viewed as high risk, as well as those who use investing as their primary money-making strategy. Lenders like to see stability.
3. Credit score. This seems like a no-brainer, but it matters more than you’d think. A decent credit score is crucial for home loans in Australia. Of course, some lenders will also sometimes accept applicants with bad/no credit history but it’s a good idea to nurture your credit history a bit before starting the application process for Loans.com.au Home Loan.
4. Current open balances. Even though open balances, such as phone plans or cable television subscriptions, don’t negatively affect credit as long as they’re being paid on time, lenders still want to know about them. If you’re seen as having too many open balances (or current debts) at once, they might question your ability to balance them with a mortgage payment. Try to close as many un-needed open balances before considering applying for home loans in Australia.
5. Your source(s) of income. Simply put, a low income will increase your odds for denial on a mortgage application. Lenders simply want you to be able to comfortably make payments on your home so that all parties can have peace of mind.
6. The home’s value. Home loans in Australia tend to get more complex and harder to obtain with Loans.com.au Home Loans Calculator.
This is because there is simply more risk on the line for both the lender and buyer. Be sure to choose a home that’s within your means and budget.
7. Your age. Lastly, there are certain risks that lenders and banks use to assess applicants in accordance with their ages. For example, younger borrowers tend to have more longevity when it comes to earning money, compared to older people. This is how age is often take into consideration when lenders process applications for home loans in Australia.