What Will Affect Your Home Loan Application

by Greg on April 22, 2015

First home

Home loans have always been the most common way to secure a property, but a changing economy has left more and more people excluded from the usual markets due to credit problems or unsecured work contracts. As a result, the average age of people buying a first home has risen and the millennial generation are seeing themselves left out of the property game. Taking out a loan from a dedicated company can be a great alternative for first time buyers. You get to own your home much more quickly, while enjoying a greater degree of flexibility on repayment options, loan terms and purchase options. However, there are a variety of things you need to take into account before putting in your application, to give yourself the best chance of getting a good result.

Your credit rating

One of the most important things you need to sort out before you apply for a home loan is your credit rating. Many people get into debt at some point in their lives, but holding on to that debt for longer than it was initially meant for, or not repaying on time can have a marked effect on your credit rating. Bad debt or even a few late payments can make it difficult for you to get a home loan, but it may be possible that your credit report needs amending, so you need to take a look at it.

In order to get a copy of your credit report, you need to contact a credit reporting body. There are several across Australia, most notably Experian, D&B and Veda. In many cases, if you’ve been turned down for credit within a certain period of time or a creditor has referred you to a CRB, your report will be free. You’re also entitled to ask for a free credit report once a year if the above two circumstances don’t apply.

Make sure you correct any misinformation on your credit report before you apply for a home loan. Then you know you’re in the best position to get that all-important acceptance.

Your deposit and your income

When it comes to applying for your home loan, it’s important to have gathered as much deposit as possible to put down. Lenders will look at this favourably and you may wind up getting a better deal. In addition to this, you’ll also need to provide income details, and this will affect how much you can borrow. Many lenders have online calculators you can use to find out whether you’re likely to be able to borrow enough for your first home. However there are options available that you might not be aware of, even if it seems from first look that you won’t be able to get on the housing ladder, either for lack of substantial deposit, or because you’re not sure your income is high enough.

Homestart home loans in Perth are changing the market and bringing in younger buyers, so you could get your first family home much sooner than you think – even if you’re struggling to raise a deposit. The loans feature a minimum deposit rate of just 5%, and even offer a rate of only 8% for new builds. This means even if you’re lacking in capital right now, you can get moved into your new home and pay for it over a period that suits you and your needs.

Renting property works well for some, but at the end of the day you’re essentially giving away money. When you own your own home, each repayment takes you closer to having an asset for life. You have the freedom to make the property your own.

Other benefits from lenders

With a home loan from some lenders, you get the option of making voluntary repayments of up to $10,000 each year to reduce the amount you owe. You can also re-borrow against these repayments in the future, freeing up cash if you ever need major repairs, want to redecorate or just need to bring in something extra. You’ll get a fair interest rate too, so you can balance your repayments with your budget more easily.

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