As the cash rate soared in Australia, so did home loan interest rates and the metrics used to assess a person’s capacity to access lending. Borrowing power is now subsequently lower than what most people have been able to access in a not-so-distant past. For homebuyers and mortgage seekers, this can be confronting news to hear, especially if you’re not properly prepared for your purchase with a pre-approval.
Buying property is one of the most exciting goals to achieve in our culture, it’s a time of optimism and dreaming of a better future for Australians. But to be frank, it is hard, and you’ll need to have your ducks in a row and hope for a little luck along the way.
Along the way, there can be many curveballs to face, tight timeframes to wriggle out from, and perplexing questions asked of you. Hurdles are frequently faced by a Mortgage Broker every single day, arming them with the knowledge, skill and confidence to work through all kinds of sticky situations.
5 Pre-Approval Starting Points
- Have a brief chat with a Mortgage Broker and key in on your goals: Figuring out what you want to buy and how you can buy is a simple first step to get you started. A Mortgage Broker will guide you from how much you can borrow in the present or the future, to what kind of deposit would be required, all the way through to settlement and beyond. We can first start talking about your position, what your lifestyle goals are, and how you to get started.
- Budgeting to save a deposit and pay down a future home loan: Yes, it is a chore, and no one likes to see how much they have actually been spending. However, it is the best method to work out how to realistically reduce your spending and increase your savings. Some banks like to assess your spending and savings habits, as they decide whether you are credit worthy or not. Knuckle down a budget, batten the hatches for at least 3 months, and you’ll be thanked by your future self.
- Carefully planning your employment situation: It sounds obvious, but we see changes in employment negatively impact lending applications more often than you would believe. Switching to a new job may cause you to wait a little, before a lender will consider your income. Starting your own business could put your home buying dream on hold for a few years! Steady income is attractive to a lender, as they want to know you’re a sure thing. If you’re planning to buy a home in the next 6 to 12 months, ensure your income situation lines up with your timeline to buy.
- Obtain a copy of your credit report: This is something us Mortgage Brokers can assist you with. You’re entitled to a complimentary copy every 3 months from credit reporting companies such as Equifax or Illion. A credit report can be a little tricky to read or understand, so ensure you go over your score and any credit listings with your Broker. Your previous credit history or lack there-of may determine what lenders are available to you. Ensuring your credit record is in good standing order is your key to accessing the best lenders and interest rates.
- Apply for pre-approval to give you bidding confidence: You can think of your home loan approval as your first foot in the door. Armed with the assurance of your financial position by addressing points 1 to 4, you’re now in position to supercharge your confidence with the conditional backing of a lender for your home loan. A pre-approval will not only present you as an attractive option to vendors and agents, but it will also speed up your timeline to settlement. This makes all the difference when deciding what terms (or lack-thereof) should be placed within an offer, or conviction when raising your paddle at an auction.
Contact us today on 08 8300 8300 to schedule a consultation with a friendly mortgage broker who can carefully manage your pre-approval finance.
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone’s personal situation is different, this article should not be taken as advice.
