Buying a new home is an exhilarating experience, but navigating the intricacies of securing a home loan can be daunting. It’s essential to approach the process with careful consideration and informed decision-making. To help you with this process, let’s explore the essential do’s and don’ts when preparing to apply for a home loan.
The Do’s:
Assess Your Financial Situation
Evaluate your income, expenses, savings, and credit history to gauge your borrowing capacity and affordability. Understanding your financial position allows you to make informed decisions and set realistic expectations. Learn how much you can expect to borrow based on your current income & expenses.
Build Your Deposit
You should aim to save a minimum of 5% of the purchase price before buying a property. However, having a deposit of at least 20% will avoid expenses such as Lenders Mortgage Insurance. Read more about building your deposit.
Organise Your Documentation
Lenders require a range of documentation to assess your loan application thoroughly. Gather essential documents such as proof of income, tax returns, bank statements, identification, and details of assets and liabilities. Your Mortgage Broker will be able to provide you with a list of documentation required.
Engage a Mortgage Broker
Don’t limit yourself to a single lender when exploring home loan options. Research and compare offerings from multiple lenders, including banks and credit unions, to identify competitive interest rates, loan features, and repayment terms. Shopping around empowers you to secure the best possible deal tailored to your needs. At Upstate, we have partnered with award-winning and highly trusted Catalyst Advisors.
The Don’ts:
Overextend Your Finances
Avoid taking on excessive debt or making significant financial commitments leading up to your home loan application. Lenders assess your debt-to-income ratio to evaluate your repayment capacity, and high levels of debt can hinder your loan approval prospects. Learn how to manage your finances effectively.
Make Frequent Job Changes
Stability and consistency in employment are favorable factors in the eyes of lenders. While changing jobs may be unavoidable, frequent job changes or gaps in employment history can raise red flags for lenders and impact your loan application. Understand the importance of job stability.
Ignore Professional Advice
Seeking guidance from experienced professionals, such as financial advisors and mortgage brokers, can be crucial. Don’t hesitate to leverage their expertise to navigate complex financial decisions and optimize your borrowing strategy. Get expert advice on home loans.
Let’s find yourself in a better place.
At Upstate we want to make your property goals come true. That’s because we’re a big agency, with the heart and determination of a boutique one.
Thorough preparation and informed decision-making are the cornerstones of a successful home loan application. Speak to our trusted mortgage brokers – Catalyst - today. Tell them we sent you!
In the meantime, if there is anything else we can do to help you on your property journey, speak to our team anytime.
The Upstate team
