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There are a number of things that are a big tick for lenders when it comes to home loan applications. Many of them are simple changes you can make, but the result can be extremely rewarding.
Blogger: Heidi Armstrong, CEO, State Custodians
1. Good repayment history
On March 12 2014, Australia changed to a positive credit reporting system which means that lenders are now able to access more information on your credit report. These changes were implemented so lenders can get a better insight into a person’s financial position to ensure they would be able to meet the mortgage repayments.
One of the significant changes is that lenders can see the past 24 months of your repayment history. So, if you are able to meet your bill repayments on time, lenders may consider you a good risk and offer you a more competitive home loan.
2. Paperwork is organised
Missing paperwork can often slow down the application process and can be a concern if you are on a tight deadline for purchasing a property. There is a certain amount documentation required by lenders in order to verify your information. Requirements can vary from lender to lender, but the required paperwork usually includes: credit card statements, bank statements, pay slips and payment summaries.
The best way to ensure you include all of the right paperwork is to speak with your lender about what is needed before submitting your application.
3. Minimal debt
Too much debt can affect your borrowing power as lenders need to be able to see that you have enough money to pay off your mortgage. If you can only just afford your current financial commitments, lenders may be wary to let you take on mortgage.
Before applying for a home loan, try to cut down as many expenses as you can. Ongoing commitments such as gym memberships, credit cards and Pay TV can affect your borrowing power, so the less you have, the better. Also, by getting rid of these extra expenses, you can use the surplus money to save a larger deposit, which will help you avoid other fees such as Lenders Mortgage Insurance.
You may assume that lenders will only assess the information you tell them, but that is not the case. Lenders have access to even more information now that the new credit reporting system has been implemented, so there is a good chance they will find any defaults or other financial information that you do not disclose. If they do uncover information you have not disclosed, not only could it slow down the application process, but lenders may be more cautious to offer you a competitive home loan.
5. Strong employment history
Your income is extremely important when it comes to applying for a home loan. Lenders need to see that you can afford the mortgage repayments and are in a secure employment position. It is a requirement for most lenders that you have been at the same job for at least 6 months and you are not on a probationary period. It can be extremely risky if you decide to change jobs just before you apply for a home loan. It may be best to wait until after you have been approved before changing.
About Heidi Armstrong
Heidi Armstrong is the CEO for State Custodians Mortgage Company. Since founding the Company in 2006, State Custodians has grown to become one of Australia’s most respected non-bank lenders. Heidi holds a Law Degree, a Bachelor of Science and a Diploma of Finance and Mortgage Broking Management. An expert in personal finance, securitised lending and the mortgage industry, Heidi is passionate about sharing her invaluable knowledge to educate borrowers.
Widely recognised and respected by industry peers, Heidi was a finalist in the 2012 Australian Lending Awards for the Best Thought Leader. Moreover her Company, State Custodians, has received numerous awards, including Money Magazine’s 2013 Non-Bank Lender of the Year, a ‘5 Star’ CANSTAR rating on four of its main loans for six years running and the prestigious award for Best Overall Customer Service at the 2013 Australian Home Loan Awards (beating all of the major banks, credit unions and other lenders and mortgage providers for superior customer service).