A Step-by-Step Guide to Prepare for Your Home Loan Application

Making the decision to apply for a home loan is a significant milestone, whether you’re a first-time buyer or considering refinancing your current property. To ensure a smooth process and increase your chances of approval, it’s essential to prepare adequately. Here’s a comprehensive guide to help you get ready for your home loan application.

Understanding Owner Occupied Loans:

Before diving into the application process, it’s crucial to grasp the concept of owner-occupied loans. These loans are for properties where you, as the borrower, will reside. Loan eligibility typically depends on your income and monthly expenses.

Assessing Your Expenses: Categorise your expenses into discretionary and non-discretionary spends. While discretionary spends like entertainment and groceries can be controlled, non-discretionary expenses such as utilities and insurance are unavoidable.

Managing Liabilities: Pay close attention to your credit card and Buy Now Pay Later (BNPL) accounts. Even if you pay off your credit card monthly, banks consider the credit limit as a liability, impacting your loan amount and serviceability. Consider reducing your credit limit before applying for a loan. Banks will always regard your Credit card Limit as a 3.5% liability, in other words, if you have a $5,000 limit, they will regard this as a ($5,000 x 3.5%) $175 monthly liability!

Document Preparation: Gather necessary documents like payslips (last three months), BAS statements, and identification documents (driver’s licence, Medicare card, passport) in advance. Each bank may have different requirements, so consult with your mortgage broker for clarity.

Navigating Investment Loans:

Investment loans follow a similar process to owner-occupied loans but with additional considerations. Since investment properties generate rental income and incur expenses like rates and strata fees, these factors influence your loan eligibility.

Assessing Income and Liabilities: Banks assess both the property’s income potential and your current liabilities to determine loan serviceability.

Tips for a Smooth Application Process:

Plan Ahead: Take time to articulate your preferences, location, and property type. Avoid rushing the process and consult with a mortgage broker well in advance to streamline the process.

Government Grants: If you’re a first-time homebuyer, explore potential government grants available in your state. Online resources can help you check your eligibility like this one for New South Wales

Consider Professional Assistance: Mortgage brokers can connect you with valuable resources like buyer’s agents, simplifying the home-buying process. 

Save Money: Explore ways to save money during your home search. Additional resources can provide insights into cost-saving strategies. We have identified some really simple helpful steps.

Applying for a home or investment loan doesn’t have to be daunting. By following these steps and seeking assistance from a knowledgeable mortgage broker, you can navigate the process smoothly. Remember to plan ahead, stay informed about available grants, and explore professional assistance to make your home-buying journey as seamless as possible.

For further inquiries or assistance, don’t hesitate to contact us at 1800 85 64 65 or book a meeting for a time that suits you.