If you have previously applied for a home loan or are considering doing so in the near future, it is important to know the things that can be detrimental to your application.
There are a number of factors that can result in an unfavourable home loan application. Things such as multiple credit cards and excessive limits, ongoing personal and/or car loans, moving house regularly, changing jobs just before your application and minimum or no savings.
Lenders will consider all of these things when assessing your application and too many ‘red flags’ may reduce your chances of obtaining a home loan or result in your application being declined.
Below are 3 things that are not as obvious to the average applicant but can have an even bigger negative impact on your home loan application:
1. Shopping for credit
Every time you make an application for credit, it will appear on your credit file. This applies to credit cards, personal loans, mobile phone contracts and home loans. A large number of credit enquiries make the lender more cautious as they don’t know if the application proceeded or was declined.
It is always recommended that you shop around and compare lenders however, this is best done via your mortgage broker who can compare different lenders and products without submitting applications to all of them. Once you have agreed on a product that best suits your needs, only one application is required.
2. Undisclosed information
When applying for a home loan, it is important to disclose all financial information upfront. Before you meet with your broker, make a list of all ongoing commitments such as personal loans, car loans or leases, other home/investment loans, credit card limits and even government HECS debts.
If these debts are not disclosed at the beginning, it is likely the lender will uncover the information and this may place you in an unfavourable position when assessing your application.
3. Poor repayment history
Recent changes to the privacy act have meant that lenders are able to see your repayment history on current credit facilities, either good or bad. These changes came into effect in March 2014 which means it is more important than ever to be on top of your credit repayments.
A good way to ensure your bills are paid on time is to set up a direct debit with your financial institution which will ensure the payments are made on the due date.
If you have had problems with your repayment history in the past, make the change now. It’s not too late to show the lender that you are making a change for the better.
If you are looking to apply for a home loan in the near future or have any questions regarding the home loan application process, please call Ashley on 0425 826 967 or 9432-2121.