6 things to consider if you're trying to get a mortgage

woman  thinking about getting a mortgage

If buying a home is on your bucket list, there are six things to think about that could help your chances of getting a mortgage.

1. Keep your credit under control

Lenders will look very closely at your credit file as they’ll want to make sure that you can meet your ongoing home loan repayments. So it's important to make sure that you’re paying all your bills on time and avoid being late with any repayments if you’re looking at buying a house.

Want to know more? Here are some more tips on how to keep your credit under control

2. Check your existing credit score

There’s a common misconception that checking your credit report can negatively impact your overall score - this isn’t strictly true.

In fact, there are two types of checks that can be made on your credit score. Checking your own credit report is known as a ‘soft’ enquiry and won’t affect your score. However, giving a lender permission to check your credit report is classed as a ‘hard’ enquiry and this does affect your score.

The Australian Securities and Investments Commission [ASIC] suggests an annual check, something you are entitled to do for free1, to:

  • Make sure that your name or date of birth are correct
  • See if your address needs updating
  • Check if any debt has been listed twice or whether the amounts are correct
  • Whether you have been recorded as missing any repayments
  • Whether someone might have stolen your identity to get credit

If anything is incorrect, now’s the time to get things fixed. You can do this for free by ordering a report from a credit reporting bureau, such as Equifax.

Want to know more? Learn how a credit score is calculated and what can cause a default to occur.

3. Keep all your documents up to date

Lenders will need certain information from you when you apply for a home loan, so they can get a full understanding of your financial situation. So it’s a good idea to keep the latest statements for your loans and any credit cards, your savings records, as well as your pay slips and tax returns on hand to help speed up the home loan application process.

As a specialist lender, we understand that providing the necessary paperwork to document your income can sometimes be a challenge especially if you're self-employed. That's why we offer alternative documentation (alt doc) home loans for so called ‘non-conforming’ borrowers.

4. Work out the right type of mortgage for you

Fixed or variable? Principle and interest or interest only? When you are choosing a home loan it's important to work out the features you need from your loan and what that will cost you in fees.

Again, ASIC offers a useful overview. They cover the different types of loans available and what you need to consider before you sign up. Including:

  • How to compare home loans
  • Principal and interest loans
  • Interest-only loans
  • Variable, fixed and split rate home loans
  • Redraw, offset and line of credit
  • Construction loans for building or renovating

5. Avoid changing jobs during the buying process

Leaving the corporate world to start your own business can be an exciting career change, but it may affect your ability to borrow when you’re trying to secure a home loan.

Some lenders may assess your income and savings, amongst other factors during the application process, and starting a new business might mean inconsistent cash flow at the beginning of the venture, or a lack of standard documentation.

Want to know more? We've pulled together some handy tips on home loans for the self-employed.

6. A word about ‘genuine’ savings

Lenders want to see that you have the ability to save. Most look for what they call genuine savings. So it’s a good idea to put your spare funds into a separate savings account and keep making regular contributions.
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Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.

All applications are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply. 

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