Home buying should be exciting, but it can also be frustrating and even end in disappointment if you haven’t properly prepared for your home loan application.
Fortunately, by understanding what is required and having the correct documentation organised the process will be a lot smoother along with less hold ups, resulting in a greater chance of being approved.
Property shopping before finance
Imagine this – you have fallen in love with a property and you just can’t stop thinking about making it your dream home. So you make an offer which is accepted but when it’s time to get finance no lenders will loan the amount required…
This heart break could have been avoided with a pre-approved loan. By doing so your finance is basically already organised meaning you know exactly what you can afford to purchase and can shop within your budget.
All lenders have access to your credit file. It is a key consideration and can be a major stumbling block if it contains infringements. So before you submit anything obtain a copy for yourself first so you know what the banks will see, what can be cleaned up and if there are any errors to rectify.
Too many applications
In addition to the previous point, every time you make a home loan application it is also recorded in your credit file. However it doesn’t reveal if you were approved or declined. If you have many applications listed it will look more like the latter, which is a cause of concern to lenders and they don’t like feeling nervous.
Not taking advantage of the first home owners grant
There are certain criteria which need to be met to be eligible for the Grant. So don’t automatically assume you qualify because if that’s not the case you may fall several thousands of dollars short. On the flip side it’s worth checking if you can take advantage if you think you can’t, you may be surprised.
Underestimating costs of purchase
As well as the loan there are settlement costs, applications fees, valuation costs and more which need to be factored in. Be getting an idea of what to expect there won’t be a nasty shock waiting for you along the way.
Not exploring all options
There are a range of different loan types available such as variable, fixed and split which all come with heaps of added features. Get to know what they are so you can understand what will work best for you.
Taking on more than you can afford
Just because you can service a certain amount doesn’t mean you have to. Make sure you have a buffer factored into your budget so that if rates rise, your lifestyle doesn’t have to suffer.
Obsess about interest rates
Just because a loan has the lowest interest doesn’t mean it will be the cheapest in the long run. There are also fees and charges on top which could make the finance more expensive overall than one with a higher rate. A better indicator of value is the comparison rate which factors in extra expenses so is a greater indication of value.
If you’re looking to change jobs – don’t! Instead wait until after you have settled your finance. Lenders love stability and starting a new job brings with it probation periods which you often have to complete before you will be considered for a home loan.
Not understanding home loan repayment strategies
Once you have a home there are a range of simple techniques which will not only help you pay off your loan sooner but will also save you thousands in the process. So you don’t have to be stuck with what you get for the full length of the term.
The best advice we can give you is to ask for some! At Bluebay Home Loans we are happy to help with any of your finance queries to save you from running into problems down the track.