Choosing a house to buy can sometimes feel relatively easy compared to preparing to apply for a home loan.
There is a lot of information, processes and fees that you need to take into consideration so it’s important that once you have narrowed down your home loan search to a preferred lender with great interest rates, that you prepare for your next step – applying.
We will get you started down the right path by highlighting a list of things you should consider to be best prepared for the home loan application process.
As a rule of thumb your loan repayments should be no more than 30 percent of your income.
When calculating how much you can afford to make in repayments, ensure that you allow for at least a 2 percent buffer for rate increases and changes to your financial circumstances.
Make sure you have saved a deposit and can show a proven savings history of at least three to six months by either depositing money into a linked savings account on a regular basis (at least once a month) or increasing your balance in your transaction account. Most loans require a deposit of at least 5 percent and you will also need to save for establishment fees and other upfront charges.
You will need to have copies of all documentation required, such as pay slips to prove your income, bank statements to show your savings, bills or rental receipts to prove your credit history and identification.
Fees and Charges
Do your homework so there are no expensive surprises. Be aware of all the fees, charges and ongoing costs.
Have you accounted for the other costs incurred in purchasing a home, such as lenders mortgage insurance and stamp duty? Check out our fees and charges checklist and our stamp duty calculator to make sure you’re financially prepared to sign the dotted line.
Finally, while it’s not the most exciting part of buying a new home, reading and understanding the home loan product disclosure statement – is certainly one of the most important parts.
Walk through the complete Home Loans Step by Step guides below;
Home Loans Guide – Step 1 of 7 – Amount
Home Loans Guide – Step 2 of 7 – Purpose
Home Loans Guide – Step 3 of 7 – Type
Home Loans Guide – Step 4 of 7 – Deposit
Home Loans Guide – Step 5 of 7 – Features
Home Loans Guide – Step 6 of 7 – Application
Home Loans Guide – Step 7 of 7 – Fees & Charges