1. Check your credit
Your credit report and credit score are crucial elements in the home loan application process. Checking your credit score and your credit report can ensure that there are no kinks in the application process. A good credit score, which ranges from 700 and above, can improve your chances of being approved. You can also access your credit report for free to check for any errors or arrears that need to be sorted before applying.
2. Find out how much you can afford
According to KPMG, 64% of Australians are planning to take out a home loan in the next two years to buy a home. However, out of this group, some Australians will make the mistake of purchasing too much home which can affect their mortgage repayments. To avoid making this common mistake you can speak to a broker or a financial advisor who can help you understand what will work for your finances. You can also assess how much your mortgage payments are relative to your income. This can be done by using a mortgage calculator to see if you will be able to meet the repayments.
3. Jargon busters
If reading through a few of your home loan application term and conditions leave you scratching your head, you can breathe a sigh of relief knowing that you are not the only one. Home loan jargons are a few things that can throw consumers off, but our helpful Jargon busters can help you understand some of the key terminologies that will affect your home buying process.
4. First home owner incentives
Cracking the Australian property market is hard, especially if you are still saving towards a sizeable deposit. There are grant incentives set by the government to help first time home owners get a foot on the property ladder. The size of the grant will vary from state-to-state and the type of home you are purchasing. For example, in NSW offers grant amounts of up to $10,000 and if the property is valued up to $650,000 it can be exempt from stamp duty. You can check with your state to see what incentives apply to you.
5. Check the home loan features
Knowing which home loan features to choose can help you manage your mortgage repayments in future. Most home loans come at a 30-year fixed rate and can be beneficial for people who are planning to stay in their property for more than 5 years. Other features to look for when choosing a home loan is an offset account and redraw facility which can come in handy for paying off your home loan and other home expenses later on.
6. Saving up for a deposit
To ease the repayments on your mortgage you should open a savings account to build a sizeable deposit. This can lower the amount that you will need to borrow and also show lenders that you are financially prepared to start your journey to owning a home.