How to get approval on your home loan

Buying your first home can be a daunting experience, especially as it will likely be the biggest purchase you will make and you will be trying to avoid any mistakes. Many first home buyers are going to require a home loan in order to afford it, so here is a how-to guide to help out with navigating the journey to property ownership.

Figure out how much you can afford

Before going to a mortgage broker, you should figure out how much you can afford.

This includes seeing how much you have saved up for your deposit, as well as how much you can afford for the repayments (which can involve creating a budget of your income and expenses for each month).

In addition to this, you should also factor in other ‘hidden’ costs involved with buying a house like legal fees, stamp duty and lender’s mortgage insurance.

Once you have a base estimate of how much you can afford, you should talk to a mortgage broker. Why not a bank? Well, at Mortgage Choice, we have the ability to help you shop around different home loan providers to get the best deal for you, and at no extra cost.

First home buyers made up 15.4 per cent of home loans in July 2015, according to the Australian Bureau of Statistics. You can be part of this statistic if you have stable finances.

Getting pre-approval

A pre-approval is a statement from a lender saying that you can apply for a mortgage up to a certain amount.

Having your home loan pre-approved in not compulsory, but it can increase your chances of landing your dream place.

This is because being pre-approved means that you are serious about purchasing the property.

What’s great about pre-approvals is that they are usually free to obtain. They are also obligation-free, so you can always back out of going with that provider if you so choose.

However, this also works the opposite way, too, as lenders still have the choice to decline you for a home loan.

Full approval

This is usually given after you have purchased a property. Your lender will require you to provide some extra paperwork, like a valuation report and the value of your current assets.

Having pre-approval can make this process faster and also increase your chances of success.