Are you considering purchasing property in the near future? Preparing early may strengthen a future application, although approval is never guaranteed. This guide complements the deposit, pre-approval and settlement steps involved in buying a new home.
1. Do Your Research: Fixed vs. Variable Loans
- Conduct research to determine the type of home loan that aligns with your needs.
- Consider fixed-rate loans for predictable repayments but be aware of potential missed interest rate drops.
- Explore variable-rate loans for flexibility, allowing your interest rate to fluctuate with cash rate changes.
- Consult with our expert mortgage brokers to understand the nuances and benefits of fixed and variable mortgages, including features like offset accounts and redraw facilities.
2. Clean Up Your Credit Rating
- Obtain a free copy of your credit report regularly from credit reporting agencies like Experian, illion, and Equifax.
- Review your credit score, managing any discrepancies promptly by contacting the relevant agency.
- Proactively maintain a clean credit report by paying bills on time, limiting credit applications, paying off credit cards, and reducing credit card limits.
3. Domino Your Debts
- Prioritize paying off existing debts, such as personal loans, car finance, and outstanding credit card balances.
- Demonstrating your ability to cover existing debts with surplus funds boosts your credibility during the home loan application process.
4. Get Busy Saving
- Set a realistic deposit target and use a savings calculator to estimate the regular amount required. A 20% deposit may avoid LMI in many cases, but lower-deposit options can exist for eligible borrowers.
- Explore options for entering the market with a smaller deposit, but be aware of potential Lenders' Mortgage Insurance if borrowing more than 80% of the property's value.
5. Employment Stability Matters
- Maintain employment stability, as lenders value borrowers with a solid credit history and long-term secure employment.
- Avoid changing jobs if you're planning to purchase a property in the foreseeable future.
6. Get the Ball Rolling
- Contact us today to initiate the first steps toward securing a mortgage.
- We can help you obtain pre-approval, enabling you to start your property search with confidence.
Good preparation can make the home-loan process clearer, but lender criteria still apply. Contact Smart Mortgage to discuss your goals and readiness for pre-approval before making offers.