The process of buying a home can be both exciting and stressful. It can take a toll on you mentally, emotionally, and financially — so there is no doubt that you’d be looking into applying for a home loan. But there are a few factors you have to take into consideration before doing so. There are many things that banks look into when you first apply for a home loan, so here are some helpful tips on what banks are on the lookout for and other things to take into consideration when applying for a home loan.
1. Keep Track Of Your Income And Expenses
When applying for a home loan, you might need to be more conscious about where you spend your money. If your account is filled with different shopping transactions, food deliveries, unnecessary subscriptions, and miscellaneous items you’ve spent your money on, you probably need to tidy up your spending habits. Banks are able to access all this information and the chances of being approved when applying for a home loan may be slim. So be responsible and always keep an eye out!
2. Employment History
Banks usually tend to check on your employment history and prefer individuals with a regular income. If you’re in the probation period of your job, make sure you have proof of your employment history. In addition to this, if you have been moving around from job to job, you also may not be eligible. It is therefore important to ensure that you have at least 6-12 months in a job and have been receiving regular income.
3. Credit History
Having a good credit score will get you a long way with applying for a home loan. The bank has access to all this information and can check if you’ve ever missed payments or have a large debt; so staying on top of your bills is a great start in applying for a home loan!
4. Credit Card Limits And Liabilities
When applying for a home loan, always be aware of your credit card limits. Lenders will look at the maximum spending on each credit card you own and will factor this into your potential expenses. It can be a good idea to reduce any unnecessary credit card limits you have before you apply.
Banks will also want to know about any liabilities you may have – from car loans, personal loans, HECS debt and tax liabilities. Before applying for a home loan, make sure you are devoting more money to pay off any existing debts you have because a lender may be hesitant to take on a customer who is juggling multiple debts at once.
5. Changes To Your Financial Situation
It is important that you outline any significant changes you might expect to your financial situation and circumstances. These can vary from retirement, a business trip, full-time studying or any medical treatments you may be undergoing.
If you’re looking into buying a home and need advice, please do not hesitate to get in touch with our team on 1800 184 284 or book a call for free, expert advice on building the home that’s right for you.