How can I get a home loan?

When applying for a home loan, one of the most pressing questions you’ll have is ‘how much can I borrow’? Once you have applied for a home loan, the banks and lenders will assess your circumstances against a number of criteria to determine the answer to this question.

While each bank or lender may be different, many will consider similar factors and information that will be used in determining the final figure that you can borrow. Here we take a look at some of these deciding factors, how you can prepare for them, and also what could influence banks or lenders.

 

Size of your deposit

It’s a given that having a good amount of money behind you is vital if you wish to borrow a large amount. Put simply, the bigger the deposit, the more you stand to receive.

If you are prepared to make a reasonably sized deposit, it is well implied that you have a healthy income coming in. Bear in mind that even if you do have an especially high income and a good credit score, you may be limited if you do not have a reasonable deposit in place.

Employment Status and Income

Your employment status can also play a crucial role in determining how much you may be able to borrow. From a bank’s perspective, an individual who is self-employed, for example, may be perceived to carry more risk as sick days and time off must be accounted for.  Shift workers are also assessed differently by banks and lenders as overtime can be a factor in determining the income of an individual.

Whilst it isn’t necessarily about how much you earn, your employment status may determine how much you can borrow, meaning a steady income is often more favourable.

 

Type of Loan

The amount you can borrow will also depend on the interest rate and term of your home loan. Put simply, the lower the interest rate, the lower your repayments will be. If you have a longer-term loan, this will mean lower repayments. However, a shorter-term loan may see you saving on interest.

 

money-pot

 

Your Living Expenses

The banks or lenders will also factor in your living expenses and the costs that go into maintaining your lifestyle. The reason they will look into this, is to find out whether you can still maintain it after making your repayments.

If you have applied for a hefty home loan amount, you may need to make slight adjustments to your lifestyle in order to meet your financial commitment.

 

Meeting these Factors

If you can prove that you are truly reliable, someone who can meet financial obligations within a time frame, you will be well on your way to borrowing a high amount. The biggest downfall you could likely face is if late payments are mentioned in your credit history. This will very likely work strongly against your case.

If you believe you’re worthy of a substantial home loan, but want more information regarding the banks or lenders’ decision-making process, then be sure to contact our industry experts on 1800 184 284. You can also book a call online.

Having trouble understanding how to finance? Download our FREE guide today to get a comprehensive overview of what you should expect and prepare for.

 

Emily Felton

Following a degree in Marketing, Emily cut her teeth in the world of journalism, writing features for various national publications. Her particular areas of interest are sustainable housing, renovation and good old interior design.

About

iBuildNew is the market leading aggregator dedicated to residential home construction and land development. As an independent platform, iBuildNew helps Australians identify and compare new home designs, house and land packages and land estates. It’s the smart way home buyers, who are considering a new build, can find the ideal options to match their individual needs. Home building is a big decision, we make sure you get it right.

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