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7 tips to maximise your chances of being approved for a home loan

When you are unaware of the lending criteria, the thought of taking out a home loan can seem daunting at first. But we've put together a few simple steps you can follow to maximise your chances of being approved for a home loan.

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1. Pay your bills

Before providing you credit, the bank will access your credit file to see if you reliably meet your monthly commitments such as bills and loan repayment. You may consider using a debit card rather than a credit card to avoid incurring debt and paying unnecessary interest. Paying things like your phone, internet and electricity bills on time can also improve your credit score.

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2. Prove you are a good saver

money saving jars All first home buyers will need to spend time saving for a deposit prior to purchasing a home. As part of the assessment criteria, Lenders will look for a borrower’s savings history. This can be in the form of regular deposits into a savings account or even by showing regular payment towards a rental commitment. It's a good idea to put a portion of your salary into a separate savings account each month. Most banks have specific savings accounts that reward regular deposits with a higher interest rate.

Find out how much you'll need to save by reading our guide to home loan deposits.

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3. Clean up your credit file

Before you even consider applying for a home loan, obtain a copy of your credit file. This can be ordered for free from credit reporting agencies such as EquiFax (formerly Veda). You can confirm that all your information is accurate. If it is not accurate, you can contact the credit provider to remedy this. Some lenders may consider borrowers with an adverse credit history, however some companies can look to repair a credit file and negotiate with your creditors on your behalf.

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4. Live within your means

Money management should be at the top of your agenda, as banks can ask to see recent bank statements as proof that you can live within your means and are able to budget successfully. Many Australians rely on credit to fund lifestyle which can result in cash flow or hardship issues. By keeping track of income and expenses, you may be able to adjust expenditure to accommodate your personal position.

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5. Get a steady job

students having fun in library When applying for a home loan, lenders like to see that you have a stable employment history within the same industry. Having a steady job and income will position you favourably with a lender as you are less of a risk than someone without a regular income.

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6. Don’t over apply

Whilst it is important to shop around and remain competitive, too many credit enquiries could result in an unsuccessful application. Each time an application is submitted, an enquiry is recorded on your credit file. This impacts your credit score where a lender might see that you are frequently seeking credit or that you may have been declined for credit.

7. Get what’s right for you

While you may have your eye on a particular dream home, think with your head, not your heart. Buy the house that suits both your lifestyle and income, not the one that suits the lifestyle we all wish we had. You can obtain a pre-approval for finance which provides you with assurance that you can proceed with a purchase within a particular budget.

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About the author: Sarah Walwyn is a Click Loans Home Loan Specialist. She previously specialised in helping customers in financial hardship. Sarah brings this experience to the Click Team and assists with non-conforming loan solutions.

Tags: low interest, first home buyer, big 4 banks, new purchase, refinance

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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