How to “bulletproof” your first home loan approval

Posted on Tuesday, June 6, 2017 - 10:00

No one likes surprises. As would-be home owners, we definitely don’t want any surprises. But how can you avoid unpleasant surprises such as a mortgage application rejection?

The surefire way to ensure your best possible chance of getting approved for a home loan? It’s not as complicated as it seems. Here’s your guide to a “bulletproof” first home loan so you can maximise your chance of approval – and perhaps even lock in a lower interest rate!

Figure out how much you can afford

Walking into a bank or broker with pie-in-the-sky dreams about how much they’ll lend is a 100% bad idea. You should know all the answers to your lender or broker’s questions before they even ask them. These are:

  • How much of a deposit do you have?
  • How much can you comfortably afford each month in repayments?
  • How much debt are you paying off right now?

“If you don’t have all this written down in painstaking detail, hold off on your application,” says Savvy CEO Bill Tsouvalas. Tsouvalas has seen dozens of Australians make mistakes, leading to unexpected home loan complications. “A home loan is likely the biggest financial step you’ll ever take; and just like astronauts blasting off into space, you have to know that what you’ve got behind you is 100% correct!”

Get your documentation together

The amount of paperwork astounds most home loan applicants; you’ll need PAYG slips, balance sheets or P&L statements (if you’re self-employed), tax returns, income statements, credit card balances, credit history and evidence of savings or gifts from others. This helps you nail all the questions your broker will ask you, and streamline the process.

“If you are better off than you thought, your broker or lender might offer you a better deal,” says Tsouvalas. “But you should check your credit history first – this is crucial. If there are mistakes on there, it’s your responsibility to fix them. This can sometimes tip the balance in or out of your favour.”

Don’t fudge the numbers

According to a recent survey conducted by investment bank UBS, 28% of respondents said their mortgage application was not “totally factually accurate.” 5% of respondents said their application was only “partially factual and accurate.”14% said they overstated household income, 13% inflated asset holdings, and 17% fudged their debt numbers. 40% of people said they lied in some form! All your documentation has to be correct, up-to-date and above all, accurate.

Even if you’re one of the 600,000 Australians that are “at risk of credit default,” lying on an application only hurts your chances now and in the long run. Your broker or lender is someone you’re going to have a long-term relationship with.

Brokers and lenders want to lend to you – help them as much as you can, and they will help you.

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Filed Under: Home Loans