5 things to know when you’re applying for a home loan

Thinking of applying for a home loan? Here are some tips to help you prepare an application that’s more likely to be approved.

1. You may need to go on a financial diet before you apply - When you apply for a mortgage, a bank will typically analyse the statements for all your accounts for the past three months. Some types of spending will dent your chance of being approved, such as any betting, buy now pay later accounts (like Afterpay), or regular trips to the bottle shop. For three months before you apply, try to be scrupulously careful with your spending – put yourself on a financial diet to increase your likelihood of being approved.
2. Start early, it can take several weeks - With all the information you’ll need to provide, expect the loan process to take time. Avoid leaving your application until the last minute; having your loan lined up before you put in an offer is the best approach. Preapproval helps you know how much you can spend, and streamlines your approval process.
3. You’ll need a recent set of accounts - Self-employed? The bank will want to see your most recent accounts, so if you haven’t already received these, get in touch and we can prepare a set for you to submit. You may also need to provide accounts for your rental properties or trusts, so check in and we can help.
4. Anti money laundering rules mean you’ll need extra documents - Anti money laundering legislation means lenders must have proof of your identity and the source of your funds. Try to stay calm as the lender keeps asking for more information; they have to collect your data, it’s the law.
5. Lenders will likely assume your credit limits are maxed out - High credit limits can limit your borrowing ability, even if you don’t use the money. For instance, you might have a credit card with a limit of $10,000, but you never use it or there’s no balance on it because you pay it off each month. Lenders often assume credit is maxed out (because you could theoretically do that almost instantly), and that can reduce your borrowing ability. One estimate found that a $10,000 credit card could reduce your potential mortgage size by $60,000. The same goes for unused revolving credit. Before you apply for a loan, close any lines of credit you’re not using.

We can help with your application

When you’re thinking about buying a house, or one of your children is getting ready to buy, let us know. We can support you with your application, help you find the documents you need and sort out your accounts.

Get in touch, we’d love to hear from you.