If you’re looking to purchase a new home, especially if it’s your first, it can be a bit of a process getting a home loan sorted if you’re not sure what you’re in for. Sometimes we get too invested in the exciting process of choosing a home without considering whether we will actually be able to get a mortgage for that home. So how can you make sure you’re in good stead to get pre-approved for a home loan?
Downsize your debt
Any mortgage lender is going to be a bit wary of lending you a large amount of money for your home if you have a high level of debt. This is because they can’t be certain that you have the ability or the discipline to keep up your mortgage payments. So before you really dive into the home-buying process, make sure that you have cleared as much of your debt as possible.
Show your saving skills
As well as proving that you can keep on top of your debt, lenders like to see that you can save money as well. Not only will you need to service your mortgage, there are also other expenses that come with owning a home, such as insurance, rates, and other potential maintenance costs. It’s important to demonstrate to the lender that you have a good amount of money to cover everything you need in relation to your new home.
Clean up your accounts
When you’re applying for a mortgage, your lender will want to see the activity in your bank account, usually the last 3 months’ worth of bank statements. In these, they’re looking at your spending habits and whether you often have unauthorised overdrafts or other negative habits. If they can see that you’re regularly blowing all of your money on eating out, this might not show you in the best light, so it’s best to get some good spending habits going before you visit your lender.
Get your deposit together
This is probably the most important thing you can do with regards to getting a home loan – if you don’t have your deposit sorted, you probably shouldn’t be house-hunting just yet! Although some lenders can work with lower deposits, you should be getting together a minimum of 20% for your deposit. If you can save more, that’s great! The more you have, the less you might have to borrow and the more appealing you’ll look to your lender.
If you’re not sure where to start, or you just want some more information on the lending criteria for home loans, get in touch with our expert mortgage team today.