subject: Seven Ways to Boost your chances of getting a home loan [print this page] Seven Ways to Boost your chances of getting a home loan
There are many ways to improve the chances of getting a home loan that are usually within the control of the prospective borrower with the top seven being:
1. Don't be late with credit card or home loan repayments. It's amazing how many people are late in making repayments out of carelessness rather than because they aren't able to afford it. Poor control is usually the problem but it makes no difference to a lender whether you could have paid it by being more organised it is simply a black mark against you.
2. Don't exceed your credit card limit. Another big blunder in the eyes of the lenders and, once again, it doesn't matter whether it was carelessness or you felt that you had no other choice, it is still viewed the same way.
3. Be aware of what is on your credit report and how it got there. Multiple enquiries on a Credit Report can result in an instant decline from any lender who relies on Credit Scoring to quickly cull their home loan applications. Every time you apply for a loan, every time that you take out a mobile phone contract, every time you apply for a credit card or interest free loan, even if you enter into a contract to pay off a new solar electricity system or any form of continuing finance, your credit report gets noted so be warned.
4. Don't change jobs if you can help it. Stable employment is one of the key factors that a lender is looking for and changing jobs, even if you stay in the same industry, can kill a deal if you are placed on probation and a lender will generally not approve a home loan for someone who is on probation. Unless it is an offer that is too good to refuse, try to stay where you are!
5. Save. A lender is looking for a good savings history over a period of months but the goodnews is that these savings can be something other than just money in a bank. Some lenders will take into account shares that have been held for a suitable period of time, equity that has been built up in a property or an inheritance just to name a few other alternatives.
6. Stay away from extra debt. Even a small personal loan or interest free loan can significantly affect the amount that you could borrow for a home loan and you need to think about the future when incurring these debts. It might be affordable now but what will be the impact in a few years. Another debt that is not always considered is the impact of a HECS debt.
7. Reduce your Credit Card Limits. Lenders don't worry about how much you owe on your credit card just the actual limit. This is because they need to consider the maximum debt that can be incurred from this credit card. So if you have a credit card with a limit of $20,000 but you only use or need $10,000, then reduce the limit as it will have a significant impact on the amount that you can borrow.
