Easy, simply follow this guide to the best and worst things you can do to get (or not get!) the home loan that best matches your lifestyle.
Warning: These are guidelines suggested by our experts. And whilst they may not all be fun, doing these will help you get to where you want to go!
Pay your bills and start saving
The first thing is to always try to pay your bills on time. Your credit history is stored on file by various institutions and will always be checked by a lender to verify your commitment and ability to pay off loans and bills. There is no single other element that can dramatically impact the success of your loan application than a poorly credit history.
It is very important to make all your other debt and loan repayments on time - especially in the 12 months leading up to your loan application.
If you find yourself struggling from time to time, it is sometime suggested that you delay on the credit card payment first, followed by any installment (monthly repayments over a fixed period of time) and as an absolute last resort any payments on existing mortgages. This is because existing credit scoring systems tend to look at similar loans first when deciding to assign a credit score.
Make sure you get in the habit of regularly saving. By saving as much as possible before the loan application you can increase the size of the down payment and reduce the amount of your mortgage, or if you need to, increase the size of the loan available to you. You should also understand how much you can afford to borrow.
Mortgage Mistakes not to make.
Firstly, don't plan to make any big purchases in the months before a home loan application. Besides the fact that this will make less available for the down payment, it might also require you to seek more credit. A significant debt such as an unsecured car loan can put a negative spin on a lenders credit score. Plus, repayments on other debts will reduce the amount you have available to pay your mortgage, increasing the risk to the ender.
Secondly, don't try shooting for that five bedroom, three bathroom, swimming pool on a quarter acre if you are currently only paying rent or a mortgage on a bedsit. Lender's take into account a phenomenon called "payment shock" when approving a loan. Going from $300 rent a month to $2000 in repayments can end if disaster if you can't comfortably afford it or if all your bills arrive at once! You can always start by using a home loan calculator to give you an idea of how much you may be able to borrow.
Remember not to just get prequalified for a mortgage, but rather get pre-approved. When you are prequalified, you have only submitted credit, income and debt information to a mortgage lender. This is just an estimation of the amount of money you may be able to borrow. The next step is pre-approval whereby the lender performs various checks and calculations to ascertain accuracy and ensure you will be capable of repaying the loan.
Getting the right help
Organising the right finance for your lifestyle can be a tricky business. That is why calling on the help of an experienced and trained mortgage broker can not only help you get the best loan, but also save you money and take years off the term of your mortgage.
A Mortgage Broker is a specialist in securing finance and home loans. And just like you seek the services of an expert for buying and selling your house, you should seek out the help of a mortgage broker to help arrange your financial affairs.
A Mortgage Store broker is always happy to talk with you and help you get started. Click to arrange an obligation free meeting.
KB: Q0008
Last Updated: 26 Sep 2006
