Buying a home is one of the most important decisions of your life and requires meticulous financial planning. From arranging upfront deposits to looking for suitable loan products, you need to manage several things. In ideal cases, with a decent credit score and good saving habits, arranging for funds can be hassle-free.
However, often this is not the case. Emergencies and other faux pas can scramble our funds, making it difficult to secure suitable loans. If you are looking for property mortgages and other guidance, read on. In this blog, we have laid a roadmap on how to get a home loan approved.
1. Understanding Your Financial Situation
Banks, online lenders, or mortgage providers prefer loan applicants with stable incomes and responsible spending habits. They want customers who pay their bills on time and have a good credit history. Also, they factor in the applicant's debt-to-income ratio while considering the loan application.
It is recommended to get your finances straight if you are in the home loan market. Pay your bills on time, build your credit history, and avoid dodgy spending habits. Moreover, you can settle a few of your multiple “buy now, pay later” (BNPL) accounts before you forward the loan application. To estimate the current state of your credit history, you can register to free or premium portals. These measures can improve your chances of landing home loans at better interest rates.
2. Preparing Required Documentation
Once you have a clear understanding of your finances, let's move on with gathering essential documents for mortgage loan applications. Collecting and organising the paperwork in advance can save you time and future hassles. Most loan agencies, including banks, request personal identification, income proof, and other details.
Every lender will ask you to present the following:
Personal Identification:
You can provide primary identification documents like a passport, driving licence or state-issued photo identification. Apart from these documents, secondary IDs like birth certificates, tax assessment notices, or credit/debit cards under your name can be used as personal IDs.
Income Proof:
These documents showcase your earnings and help lenders decide your eligibility. If you are working full-time/part-time, the latest payslips or bank statement detailing your income is enough. For self-employed applicants, banks request a one-year individual tax return and accompanying Australian Taxation Office or ATO’s notice of assessment. Additionally, you have to provide a balance sheet as well as profit and loss statement of your operations.
Assets:
In the loan application, you must declare assets with measurable value. It could include additional properties, automobiles, investments, and more.
Liabilities:
Additionally, you have to declare your liabilities and provide the necessary paperwork associated with them. The bank will request statements for your credit cards, loans, and other expenditures.
Additional Paperwork:
If you are a first-time home buyer, you can take advantage of the First Home Owner Grant scheme (FHOG). Another grant, First Home Super Saver Scheme (FHSS), can help you save under your super account. During the loan application process, you can provide the necessary documents to get these benefits.
3. Researching and Choosing the Right Mortgage
With your paperwork in line, you can move on with the next phase of loan-hunting. It’s important to research and compare different loan products, lenders, etc., to get the most suitable deals. You can enlist a mortgage agent to help you with the research.
To choose the most suitable mortgage, consider
Interest Rate:
Getting the best interest rates and terms can save you thousands of dollars over the life of your loan. Obtain quotes from multiple lenders and compare their rates, fees, and loan terms.
Compare Fees:
Home loans come with numerous fees and extra costs. These charges can make your loan more expensive, and eventually, you might end up paying more to the lender.
Loan Terms:
It refers to the number of payments you make.
Redraw Facility:
Few lenders offer a facility to redraw additional funds you have paid into your loan.
The following are different types of mortgages available:
Once you have selected a loan product that meets your needs, it's time to submit your application. After the lenders receive your application, they will review basic information regarding your financial condition. You will get a pre-approval for the home loan once they are satisfied. It means the lender has reviewed and agreed (in principle) to approve your loan. If you have not yet found the property you wish to buy, you can keep searching for suitable property while working on the loan application process.
Then comes conditional approval for a home loan which occurs once you have made an offer on a property and formally applied for a mortgage. Here, the lender conducts a more detailed review of your financial situation to check if you meet specific conditions.
Now the next question that arises is “How long does a mortgage approval last?” Well, the entire process, from application to settlement, can take two weeks to several months. It depends on various factors including the complexity of the application and the lender's efficiency.
Get Started on Your Melbourne Home Loan with Mortgage Friend
Home loans make it easier for you to buy a property. However, scouting for the right mortgage, arranging paperwork, and filing the application can take time. To make the job easier for you, we forward our service.
Whether you need assistance to manage bad credit or secure home loans in Australia with guaranteed approval, rely on Mortgage Friend. In cases you have found the house and agree to buy it, our mortgage broker can work on getting the property evaluated. They can assist you through the loan applications and manage necessary documents. Moreover, these experts can double-check for any errors or omissions.
You can call us on 0407 949 044 or email us at jkassoc@arc.net.au. Our services are available throughout Melbourne, Victoria.
