Applying for a home loan has a lot to do with your personal preparation! Here are a few tips to ensure you have the best chance at approval!
Show ability to pay
Being able to show that you can repay a home loan is one of the key requirements for lenders. If your overall repayments are going to increase, the lender will need to see where the extra money will come from. For example, the rent you are paying currently may cease, perhaps you’re putting money away in savings or paying extra on your personal debt which will show that you are capable of repaying more.
Clear credit history
Having a clear credit history is of key importance when applying for a home loan. This can include anything from rent to personal loans and any other debts that you have accumulated. Having late or missed repayments on any of your debt is going to be a massive red flag for the lender. On the other hand, showing that you are diligent and on time with your repayments will show the lender that you are a good risk.
Showing that you can manage your expenses and save money on top is a huge tick for lenders. In a nutshell, the larger the contribution you’re making in the form of a deposit, the less you need to borrow and the lower the risk you are to the lender. If you are borrowing more than 80% of the loan, you'll need to show a clear savings history!
If you have several credit cards and personal loans you may want to look reducing your existing debt as much as possible prior to applying.
Note: The credit limits on all of your cards are included in your repayments as if they were fully drawn – even if they are not. Credit cards, interest-free facilities and personal loans can mean that you have less surplus cash available to meet repayments on a new loan. Look to reduce the limit on your credit cards to help increase your borrowing power.
Peard Finance is here to help! We've got many lenders and banks we work with and can find a lender to suit your individual circumstances. Trusting a mortgage broker to do the hard work for you will ensure the best chance for approval!