Step 1: Get or keep your credit score in good standing
Your credit score is one of the most important factors in your mortgage approval because it’s used to determine your risk as a borrower. Make sure you pay all bills on time and don’t apply for new lines of credit, aim to keep balances less than 30% of your credit line. Less than 10% is ideal, and don’t apply for any other types of loans prior to taking out a mortgage.
Step 2: Start Saving
The more you save now the easier the loan will be. It’s also a good idea to set aside some cash for home maintenance once you actually become a homeowner. A good rule of thumb is to set aside 1 to 3 percent of your home’s purchase price each year to cover these items.
Step 3: Pay off some debt
While you don’t have to be debt-free to buy a home, paying down amounts owed increases your borrowing capacity. Lenders ideally want your debt to be at or below 36 percent of your gross monthly income.
Step 4: Discuss your home purchasing budget
A home is likely the largest purchase you will make in your lifetime. While a lender will give you an amount you could be approved to borrow, you have to determine what is affordable for you. A budget for what you are comfortable spending now, not 10 years from now.
Step 5: Go mortgage shopping
Finding the best loan option depends on your financial standing and your home ownership goals. Do you have a lot of money set aside for a deposit? Or do you have the bare minimum for a deposit?
Talking to one of our Mortgage Broker’s once you decide you want to purchase a home is essential because they will break down loan options and their eligibility criteria. They will also help you set deposit, credit score and debt pay-down goals.
Step 6: Meet with a Mortgage Broker to organise a Pre-approval
A pre-approval should always be the first step in home buying. To get a pre-approval, one of our Mortgage Broker’s will compile a loan application with the information you have provided including income, assets, liabilities, employment, etc. Your chosen lender will then analyse this information and issue a decision on whether or not you are eligible for a loan.
If you would like more information get in contact
Amie Tahiri, Business Manager
Australian Credit Licence384324
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