How to get loan ready

Applying for a home loan soon? Follow these steps to give yourself the best possible chance of getting a yes and getting the most.

Check your bank statements:

Most banks will want to see 3 months of “good” account conduct. What is good account conduct? No overdrawing on savings accounts, no late payments fees on credit cards, personal loans or rent.

Limit discretionary spending:

Time to delete the Uber eats app. The banks are looking at your capacity to repay the loan, so you want to show as much left-over money as possible at the end of the month. This means tightening the belt for 3 months. Look for those things you can minimise or eliminate that aren’t essential. Look for ways you can cut costs and pour that extra money into your savings account.

Know your numbers:

Make sure your cash deposit is enough to fund the purchase amount you are aiming for. Speak to your broker early to understand the amount of money you will need to contribute yourself.

How long have you been in your job?

You want to be able to use all and every source of income. Most banks will want to see 6 months employment history and that you are out of your probation period. Some will consider less, especially if you have been working in a similar role previously.

Have you done your tax?

A common document that banks will ask for is the most recent Notice of Assessment from the ATO. Especially important if you are self-employed or have an unusual or variable source of income.

Check your credit file:

It’s usually a long time between views, that is, if you have ever viewed your Consumer Credit Report. This document contains information on every application and loan you have taken out, as well as reports on account conduct including late or missed payments. Defaults are often listed here. Sometimes things can be listed by mistake and can be removed. It is easier to do this in advance and apply with a clean record.

Consider reducing limits on Credit Cards:

While a $10,000 credit card limit may not sound like a lot, it can have a big impact on your borrowing capacity. For every $10,000 of limit on a credit card, it is approximately $80,000 of reduced mortgage capacity. If you aren’t using it, consider reducing it.