Article published 16 March 2021
It’s official – we’re in a seller’s market1, and that means buyers need to act fast to secure the home they want.
Applying for a home loan shouldn’t have to drag on for weeks. A few preparations can help turbo-charge an application, speeding up unconditional home loan approval, and helping you beat other buyers to the home of your dreams.
1. Grow a deposit
You’ll usually need a deposit to secure a home, though thanks to initiatives like the First Home Loan Deposit Scheme, you may only need as little as 5% deposit2 if you’re a first home buyer.
Remember though, buying a home involves other upfront costs like stamp duty, legal fees, and pre-purchase pest and building inspections. So, you need to allow extra savings on top of your deposit to be in a position to buy.
Working out a savings plan – and sticking to it can help you reach your target deposit, If you’re unsure how much you need as a down payment, your Mortgage Choice broker can provide answers tailored to your situation.
2. Reduce or eliminate other debts
Lenders like to know that you can comfortably manage home loan repayments, so it can be a potential issue if you’re already juggling a number of other debts.
Where possible, aim to pay off – or at least reduce, any outstanding debts before applying for a home loan.
When it comes to credit cards, lenders are often more interested in your credit limit than the outstanding card balance. After all, you could potentially max out on card debt after you buy a home. Asking your card issuer to trim back your credit card limit before applying for a home loan, could strengthen your application.
3. Check your credit record
When you apply for a home loan, lenders will take a look at your credit record. It’s like a history of how well you’ve managed debt in the past. So, it’s worth getting in first to see if there are any blacks marks on your record that need to be sorted before applying for a home loan.
You can request a free copy of your credit record by contacting credit reference agencies like Illion and Equifax.