Applying for a mortgage? Improve your chances

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Are you in the market for a new home? While scouring real estate Websites is exciting, it’s a long road from the dream of home ownership, to actually owning your first home. Your first and biggest hurdle is getting a deposit and then having your mortgage approved.

While lending requirements may have tightened since the global financial crisis, there are things you can do to put yourself in the best position to get your mortgage approved.

Here are some ideas.

1. Improve your credit rating

Lenders consider your credit score when assessing your mortgage application. Your credit score is calculated by a credit reporting agency and delivered in a credit report.

Your credit score depends on your credit history. It takes into account the number of loans you have and whether you make repayments on time.

To improve your credit score, make sure that you pay instalments on any loans that you already have, as well as all of your bills and rent on time.

2. Clear your debts

Debts count against you when you are applying for a mortgage, so the less debt you have, the better. Reduce your credit card limits and cancel any cards that you no longer use.

If you’re thinking about buying a car on finance, it may be a good idea to wait until after your mortgage has been approved.

Consider booking a chat with your Smartline Adviser to see if existing loans and debts can be consolidated and whether this will help to get your mortgage approved.

3. Save more

One of the biggest challenges for first home buyers is saving the 20 percent deposit. As well as the deposit, you may be up for stamp duty, conveyancing, loan application and other fees. While first home buyer incentives and concessions make a difference, you will still need to save as much as you can to enter the housing market.

Start by chatting with your Smartline Adviser about how to get ahead or seek advice from a qualified financial adviser. Our Savings Plan calculator can help you get started.

4. Stable employment

When assessing your mortgage application, lenders consider the stability of your income, and how secure your future income will be.

People who are self-employed usually need to provide tax returns for the last two years. If you are on a salary, you will need the last two payslips as proof of income.

If you are in the market for a new home, consider keeping your employment as stable as possible. Lenders regard people in permanent positions favourably.

5. Do your homework

Put yourself in a good position for mortgage approval by doing your research. Get your paperwork in order, research first home buyer incentives, and talk to your Smartline Adviser. The more leg work you put in beforehand, the better prepared you’ll be and the greater your chance of success.

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