Applying for a home loan is a complex and sometimes overwhelming process. Not so much in your engagement with the bank, but there is a sense of scrutiny and investigation when you submit your application. To top this off, you need to find a bank or lender that suits your needs, and also one that offers you the best deal.
The key to getting the home-loan you want is to ftake into consideration everything the bank has to offer, but in the end the more attractive you are, the more chance you have of getting the loan you want:
- The less you have to loan, the more attractive you are
If you are looking to purchase a $500,000 apartment, and have $50,000 as your deposit, and another $50,000 in savings, your financial situation looks healthier, stronger and ultimately more persuasive. Additionally, the more funds you have accessible to put forward in front of the loan, the more guaranteed repayments the bank has.
- Stable employment
Providing proof of income is clearly imperative to whether your application for a home loan is successful or not. If you are thinking of changing jobs and also thinking of buying an apartment, don’t. The more stable your lifestyle and employment looks, the happier the lenders will be.
Lenders will generally, as a rule of thumb, measure your income by the amount you have declared to the tax office over the past two financial years. However, if there is a significant disparity between the two years, this can be due to a change of job, or pay rise, they will take the lower one, and add 20%.
- Serviceability and responsibility
Despite what you may think, the lenders have a legal requirement to make sure they are satisfied with you ability to meet your mortgage repayments on time and in a regular fashion. This is effectively referred to as ‘loan serviceability’ and you’ll see it pop up quite a bit when you are loan-browsing. There is no obvious way this is calculated, but remember that lenders cannot give you the current interest rate, instead you will be given a rate that is usually 1.5 to 2% above the current average so that they can prepare for any increases in the coming years.