Securing a home loan that doesn’t require you to over commit yourself or put yourself in a difficult financial position can be a tricky process. However, it can be made even harder if you rush into it and are not fully prepared or aware of the potential hurdles.
Not being truthful
Lying or not providing a complete picture of your financial position is one of the fastest ways to have your application knocked back. During an application process, your credit history will be investigated very closely. So, to avoid this being the reason your application is denied, make sure you are upfront about your position.
Regardless of whether you’ve defaulted on a phone bill, credit card bill or any other debt commitments, be upfront about it. Having a default is not the end of the world, however, not declaring it and leaving it to be discovered later will only increase the chances your application is denied.
Not declaring all expenses
As part of your application, lenders will require you to declare all outgoing expenses that you have. Failing to declare your expenses, could lead to real issues down the road.
To avoid having an application denied because of non-disclosure issues, declare everything, no matter how small. So whether you have an emergency credit card, car repayments or a student loan, let your lender know.
Your Employment status
Lending institutions prefer individuals who are in a stable employment position that provides them with regular income. To improve the chances your application is accepted, aim to stay in one job for at least six to eight months.
If you are planning to change jobs as you are seeking a home loan, you may need to reconsider putting one on hold. If this isn’t possible, ensure you have the financial safety net in place to support both your mortgage repayments and lifestyle.
Having the financial resources in place will give your lender confidence in your ability to maintain repayments while you are in a transition period.
While this may seem like a no-brainer, make sure you complete and provide all the paperwork your lenders require at once, and on-time.
Sending in an incomplete application could cause massive delays in the process. If for whatever reason, you and a lender are forced to go back and forth because of missing documents, it could potentially derail the entire process.
We recommend that you carefully read the application several times and are aware of every piece of information a lender or bank requires. If you are unsure of the requirements, seek help from an experienced mortgage broker.
Not being aware of lending criteria
Every lending institution is different, thus, they all have their own lending criteria and requirements. One of the worst things you could do is assume every institution is the same and complete applications in a cookie-cutter manner.
Make sure you understand each lenders rules around property size, location density, LVR requirements and more. To avoid the heartache of missing out on a house because it doesn’t meet lending criteria, make sure you seek pre-approval before you start hunting around.
Seeking the wrong structure
It is very tempting to seek a lender with the lowest interest rate and then attempt to fit your lifestyle around those repayments, without taking the time to fully understand what the repayment structure entails.
While this may seem like a quick and easy way of securing your dream home, it could hurt you in the long run. Take your time and create a repayment structure that suits you, both in the present and in five years. Once you understand this, you can then seek out a lender that is able to provide this structure at a manageable rate.
Not understanding the extra costs
One thing many prospective homeowners forget is that the process of securing a home loan is an expensive one.
Make sure you factor in the additional costs that may arise. Such as Lenders Mortgage Insurance, Mortgage Protection Insurance, legal fees, stamp duty, application fees and inspection costs. Factor these costs into your budget and cash flow projections, so you don’t find you are several thousand dollars short.
By all means, these things can all be avoided if you take the time to go through an application carefully and thoroughly with a trusted adviser or mortgage broker. At The Mortgage Supply Co, we are experts in helping prospective buyers gain approval on their home loan. We will not only help you get all the paperwork in order, but we will also search for the best lender and deal possible for your situation.
CONTACT COLIN TODAY
027 643 5454