When you feel that the time is right for you to buy a home, then it is time to take action and acquire your “dream” house right away. There are few steps that you must take when applying for a home loan and increase your chances of getting approval. The following are some tips on how to prepare for a home application.
Identify the house that you want to purchase
First of all, it is advisable to identify the type of house that you wish to buy before you can apply for a home loan. This means that you will have to spend some time searching for the ideal house that will suit your needs and that is affordable too.
Most lenders have certain restrictions regarding property such as lending only those individuals who are buying in large cities. Find out from the lending institution in your area what restrictions and regulations are applicable to your area.
Know more about the basic lending rules
The first thing you must know about when preparing for a home loan application is to find out more information about the existing lending rules. The following are some of the basic things that you must have when applying for a home loan.
Employment: Most lending institutions prefer that all applicants are currently employed for at least 6 months.
Some lenders require you to have an employment record of at least 12 months before you can be considered for a home loan. If you are self employed then you must at least have an employment record of 2 years.
A good credit history: Most lenders will want to look at your credit history, if have a bad credit history then your chances of being approved for a home loan are reduced.
Before you apply for a home loan make sure that your credit history is clean. Pay off all your debts and avoid applying for too many personal loans or credits cards prior to applying for a home loan.
The deposit you make matters: If you make a large deposit when applying for a home loan, so much the better. This will lower the risk to the lender and increase your chances of being approved for a home loan.
For example, if you have deposited 80 percent of the value of the house, then you are highly likely to be considered for the home loan by the lender.
Have some savings: Lenders need to see your savings before they can consider you for a home loan. Before you apply for a home loan, try and make regular contributions to your savings account, so that by the time you apply for a home loan you have a substantial amount of money.
Your savings account will act as a backup for you when you are applying for a home loan. Most lenders would prefer to deal with an individual who has a good amount of money in savings rather than an individual who has no money at all.
Your assets position: It is important for lenders to know how much you have in assets, in the event that you fail to pay back the loan. An individual who has no assets is likely to have their home loan rejected.
When applying for a home loan, attach all your assets on your application to increase your chances of being approved for a home loan.
Your payment history: Make sure that you pay your bills on time and avoid taking too many personal loans. Most lenders will approve your home loan application, if you have a credible payment history.
Paying your bills on time will give you a good payment history and increase your chances of your home loan application getting approved
If you have a guarantor: When applying for a home loan, try and get a guarantor or guarantors to increase your chances of getting approved for the home loan.
Keep your documents well
Most lenders will ask for a lot of information when you apply for a home loan. Dedicate a separate file where you keep all the important information for future use. This information will increase your chances of getting your home loan approved.
Keep all your credit card statements, tax returns records and pay slips. Attach any other financial information that might increase your chances of getting your home loan approved. You will need the following documentation when applying for a home loan;
– Recent statements for your debit, credit and any other personal loans
– 100 point ID driver’s license, an ATM card, and Medicare
– A recent rental statement for any investment properties that you own
– A current bank statement
– A copy of the contract sale for the property that you want to purchase
– The location of the property, attach details such as the plans( council approved or a draft)
Your refinancing avenues
– Two recent pay slips
– A bank statement of your savings account
– A copy of the deposit that you have made on the property.
– Two years personal tax returns (for self employed applicants)
Two years personal tax assessment notices (for self employed applicants)
Two years company, partnership or trust tax returns (for self employed applicants)
Two years financial statements (for self employed applicants)
Guarantors’ information
Your guarantor’s must have the following information;
– 100 points ID Medicare, driver’s license and an ATM card
– Documentation from the council showing that the property being used as security for the guarantee.
– A current statement for loans on that property.
Ask for advice from a qualified financial adviser
It is equally important for you to make sure that you have all the requirements when applying for a home loan. You should seek the advice of a competent financial adviser on how to prepare for a home loan.
The financial adviser should be able to guide you on what you need in order to get approved for the home loan. With all the necessary information in place, you can submit your home loan application and wait for a response from the lender.