One quick Google of ‘home loans’ turns up a seemingly unending list of results. So how are you supposed to narrow down your options and pick the best one, let alone do it before anyone else tries to apply for the house you want?
First, take a deep breath. Then follow these five preliminary tips before you start actually applying for home loans. It’ll put you ahead of the game, streamline the process and increase your chances of success.
Lifehacker has partnered with Mortgage Choice to help you enter the property market.
#1 Organise Your Finances
Buying a house takes money, so having your finances in order before you get a loan (or a house, of course) will offer you the best chances of success.
Work out what you can afford to pay, and subsequently, which properties are in your reach. If you need help crunching the numbers, free online tools like these calculators from Mortgage Choice can make things easier.
While you’re at it, you need to be well aware of your own credit history. Any problems with it – such as bill defaults and even any prior loans or credit applications you’ve made – can have a bad effect on your application, so make sure you resolve any issues ahead of time.
You’ll also need to have your deposit ready to go ahead of time. Generally, that means a 20% deposit on the purchase price of the property you want and any other upfront costs. However, you’ll also need solid evidence that you have been regularly saving money for at least three to six months in a row. You can do this by showing things like bank statements.
#2 Check If You’re Eligible For Repayment Help
There are governmental schemes to help eligible first home buyers make a property purchase. There’s the ongoing First Home Owners Grant which provides a lump sum of money towards their first home or first property to build a home on.
There’s also the new 2020 First Home Loan Deposit Scheme which allows first home buyers to provide just a 5% deposit and helps lower interest on mortgage repayments. Checking if you qualify for either of these should be top of your list.
You also currently have a chance to win two years’ worth of new or existing home loan interest repayments, thanks to Mortgage Choice. Find out if you’re eligible and enter the draw here.
#3 Do Your Research
There’s really no other way to go about getting a home loan except good old fashion research. They’re so personal that you can’t just go with the same one that your friends went with – even if they loved it – and expect it to necessarily work well for you too.
You need to know things like whether it’s a ‘Principal and Interest loan’ or ‘Interest-only loan’, and the length of the loan terms on offer. You also need to compare interest rates and any mortgage features offered.
It may seem like a lot, but doing your due diligence before applying for a home loan will help you secure the best one for your needs.
#4 Ask For Help If You Need It
Having said that, it would be understandable to feel a little overwhelmed by it all, especially if home loans are completely outside the wheelhouse of your current knowledge.
That’s where taking advantage of qualified professionals like mortgage brokers can be a huge advantage. Not only are they able to help you compare home loans from several different banks and assess which one might best suit your needs, but they can also help you identify any problems with your credit history and help you work to resolve them. Not to mention it’s actually a free service to you, as they’re paid by the banks.
#5 Have Your Paperwork Prepared
We’ve already mentioned the need to have proof of your savings plan, but you’ll need a lot more paperwork prepared on top of that. Things like proof of employment and any assets you may have, as well as evidence of any liabilities and expenses you regularly have to deal with. Of course, you’ll also need photo ID, tax returns and recent payslips.
Gathering everything ahead of time will make the home loan application process that much smoother, and help avoid hold-ups due to accidentally leaving anything out.
Taking a little time to get prepared will put you ahead of the game for your home loan applications and get you into your new home much faster.