Home Loan Preparation Guide
Employment Stability
Full-Time Employment: Lenders usually require at least 6 months in the same job.
Casual Employment: Generally, 12 months of continuous casual work is needed.
Self-Employment: Lenders often require 2 years of business history.
Every case is unique, and some applicants may qualify even with less time.
Credit History
Importance of Credit Report: A lender will review your credit file, which can impact approval—especially if borrowing more than 80% of the property value.
Improving Credit Health: Obtain a free credit report.
Clear outstanding debts.
Avoid new credit cards or personal loans 12 months before applying.
Deposit Size
Starting a Deposit Fund: Create a budget to help save for a down payment.
Aim for a 20% deposit, which is seen as less risky by lenders.
Deposit Calculation Example:
Less Than 20% Deposit Options:
Lenders may still approve a loan with Lenders Mortgage Insurance (LMI).
There are government programs for first-time buyers with a 5% deposit; contact me to see if you qualify.
Lenders Mortgage Insurance (LMI)
Trigger: Required if borrowing more than 80% of the property value.
Cost: Typically 2-3% of the property value, which can be included in the loan amount.
Savings Habits
Building Consistent Savings: Open a savings account for the deposit.
Make regular, consistent deposits over at least 3 months.
Avoid withdrawals and keep all extra funds in this account to demonstrate reliability.
Property Selection
Lenders prefer properties that are easy to resell, which influences their approval.
Guidelines for Property:
Size: Aim for properties over 50 square meters.
Location & Amenities: Some suburbs and specific features (e.g., parking, multiple bedrooms) make properties more favorable.
Condition & Red Flags: Properties in poor condition or with certain restrictions may face challenges.
Assets and Liabilities
Reduce Liabilities: Pay down unsecured debts, limit credit cards, and lower credit limits.
Examples of Assets:Savings, property, investments, vehicles, superannuation, etc.
Examples of Liabilities: Mortgages, credit card limits, student loans, personal loans, ATO debts.
Guarantors
Family Support: Family loans or gifts account for 30-50% of first-home buyer funding in some areas.
Guarantor Loans: Increasingly popular, especially for young buyers. Contact me for a free borrowing review and to assess if a guarantor loan could help you.
By following these guidelines and building a strong financial profile, you can improve your likelihood of securing a home loan.
Reach out for personalized advice or support in preparing for your application.
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