Unless you are the blue blood and elites that can full-paid a house, most of us would need a home loan to finance a house, regardless of owner-occupied or investment property. And according to the Australian Bureau of Statistics, the employment rate has raised to 7.4%, full-time employment has decreased while part-time employment has increased, this shows a shift in companies preferring part-time committed than permanent roles.
In times like these, lending institutions are getting more cautious and careful when accessing applicants borrowing power and subsequently takes longer decisions process. But we have summed up some key ways that can ease the wait and kick things faster.
1. Cash
Lenders typically accept 80% maximum mortgage lending, if you need to borrow more than 80%, then the lender’s mortgage insurance is required. The larger the deposit you have, the less risk lender will associate to and are happier to lend you the money to purchase your dream home.
HSD Finance suggests that to reserve a portion of savings for the down payment, and also reserve some for renovation, tax and other expenses associated with purchasing a new home, such as lawyer, inspection and moving etc.
2. Career changes
Should you be considering switching between jobs, it’s possible the best to apply for a home loan once you are comfortably settled with the new role. Lenders have more confidence in lending customers money once the applicant has past probation and worked for at least half a year.
The longer you work in the company, the more confident lender has on you, as your salary will be the indication for your repayment power. However, don’t let this discourage you to change your job or apply for a home loan. By changing job you can possibly have a better income, higher borrowing power, and a better lifestyle. Just speak to your lender or mortgage broker and keep reading the below 3 C’s!
3. Consolidating your expense
Honestly disclose your financial positions by listing what expenses you have every month, you will be surprised how much small expenses will costs you monthly. Expenses will cover bills, Netflix, gas, your kid’s tuition, Spotify, Patreon subscriptions just to name a few...Do not forget to take into account things like insurance too.
A well-prepared expense list lets lenders anticipate your borrowing power, and recommend you the best home loan you can comfortably afford while maintaining your desired lifestyle.
Check through your bills over the past months or entire year, start categorising the expenses so lenders or mortgage broker can get a full picture of your expenses.
4. Convince your repayment ability
Applying for a home loan is similar to an interview or a date, ultimately you are proving yourself and convincing the other party to have confidence in you.
Talk and explain to your lenders how you treat repayment, prove to them when any worthy evidence you can, such as a good rental record, credit history, investments assets etc.
5. Credit card? How many and any debts?
Similar to expenses, there may be credit cards that customers have already omitted. Check your credit cards and calculate how much debts owning to the institutions
The balance and your repayment behaviour will also help lenders to access your home loans faster. Different Fintech tools should be considered as well such as afterpay, zip. Although these are quick liabilities, lenders can be based on these to determine the application.
This time we have covered the 5 C’s to simplified and get home loan approval faster. There could be many other methods to ease your troubles. If you lack some or all of them, don’t panic! Talk to your trusted mortgage broker or lender to give you the best financial advice.
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The views and opinions expressed on this blog are solely the views of the original author and other contributors or sources. These opinions and views do not necessarily represent those of HSD Finance, and/or any/all contributors to the site.