Tips For Improving Your Chances Of Loan Approval

Applying for a home loan can be daunting, but there are steps you can take to make sure your finances are in order and your application is the best it can be. Demonstrating that you have the means to service a mortgage goes a long way to improving your chances of getting a home loan application accepted.

Have Proof Of Long Term Savings

Most lenders have a mandatory policy for people applying for home loans, requiring them to show they have been consistently saving for at least three months. Savings accounts and term deposits are considered ‘genuine savings’ and are good options to show as proof of saving. Even if you are planning to use funds from a tax refund, a grant such as the First Home Owners Grant, or an inheritance or gift from relatives, you will still need to demonstrate that you have been putting aside funds to save up for a deposit.

Check Your Credit History

Your credit history will be taken into consideration when you apply for a home loan, so make sure that it is in good shape before making your application. The report will include information on any credit products you’ve purchased, your repayment history, any defaults or non-payments, and all credit applications you’ve made.

It’s important that the information on this report is correct; errors could affect your chances of having a home loan approved. When you get your credit report, check that all the loans and debts listed are yours, and that your personal details are accurate and up-to-date. If something is wrong, contact the credit reporting agency and request for it to be fixed.

Avoid Career Changes

Lenders prefer applicants who have been in a job for a longer amount of time. This makes you appear like a safer option for the bank. If you are planning to move to a different company or industry, wait until after your mortgage application has been approved. You will be required to supply at least three months of your recent payslips as part of your loan application.

Manage Your Money

Having good financial management before you apply for a home loan will go a long way in improving your chances of approval. Lenders prefer applicants who manage their money responsibly, so reduce your debts (such as your credit card debt or car loan) as much as possible before applying. The best way to do this is to make more than the minimum monthly repayment. Stay up-to-date on all bills and ensure you are living within your means. Putting together a budget for living expenses can help with this. Avoid applying for any other kind of loan or credit card in the months before applying for a home loan, as all these applications go on your file.