How to get a home loan
Disclaimer: This information is general in nature and has not taken into account your personal financial position or objectives. Before proceeding please refer to a licensed adviser or tax agent and relevant PDS for product details before proceeding.
Having a home in Australia is like living the nightmare of a lot of expats. Maybe you would like to live in yourself as a part of the investment or you would want to purchase a house. Which is a better place than the sunny shores of Australia? We can all testify that purchasing your own home is an essential financial decision for one to make. There are a number of things that should be put in mind before applying for the home loan. They include:
How much amount you require to save for the home loan
Just before you begin searching for a property to buy, you need to ensure that all the necessary finances are in order. Also put in mind the extra costs such as the legal fees, required stamps, and rates of water, insurance mortgage of the lenders, insurance and all the repairs necessary when you are working out if you are capable of affording the home loan.
You are required to save as much as you can. Coming up with intelligent ways of managing your money will aid you in saving for a home. The much amount you deposit, the less you need to borrow. In addition, the larger your deposit, the lower an individual’s Loan to Value Ratio. (LVR). These refer to the loan amount that is divided by the property purchase price. If you have an LVR that is above 80% then definitely you will be charged the mortgage insurance of the lender and other lenders will go further to applying a higher rate of interest to your loan. Therefore, if you are able to save the bigger deposits you will be able to avoid these costs associated with extra stuff. If you are purchasing a home for the first time ever, you may be entitled to the government of Australia grant.
Choosing your home plan
Immediately you are done sorting out your budget, then it’s definitely the best time to look for the loan:
• An individual should take their time to choose a home loan so as to be able to find ones best needs.
• If an individual is using a broker, they should be able to do some checks before signing any documents.
• You should be able to carefully read the credit contract and look at the rates of interests and fees so that you are not caught out by the costs that come unexpectedly.
• If the loan is ready and you need to switch the lenders, you will get the help in comparing the different costs.
Satisfying the criteria of the lenders
There are a lot of ways that the lenders do require those applicants that do not have an existing property to meet. This are what should be done just before the loan application process continues:
The lenders do have legal requirements to ensure they get contented that you are going to meet the repayments of your mortgage every time. There are no exact calculations regarding this as it varies from the different lenders. Therefore, if your lender has fully been satisfied that you are going to repay the loan, then you have passed the first step of loan application.
It usually proves that you have a stable and secure income. This can be illustrated by the employment history continuity. Therefore, if you are found to be on probation, lenders may give you a period of time first to regain the stability.
If your bank is contented that you can pay the loan, they will give their go ahead. The property that you acquire can also be used as a mortgage security. This means that the lender will have to hold on to your title documents until the time you will fully repay the loan. The security quality is of importance to the lender and therefore they will be able to give much concern on the types of building such as the locations.
Why some of the home loans applications are turned down
Besides from failing to meet some of these demands by the lenders, there are still other reasons as to why the lenders would decline the loan applications from the capable borrowers. The reasons include:
Most of the lenders have gotten the knowledge that it is important to consider the borrowers track record. However, this is not fair to those applicants, for example, those that left work a bit to take care of their children.
Another reason is that the lenders need to get satisfied with whichever property you offer to them as security for your home loan. The lenders usually require a good property with a middle range price. Therefore, if you move further from this, then the less likely for you to get a loan.
The borrower’s credit record can also interfere with the loan to be issued to them. Therefore if by any chances you have been applying too many forms of credit services over the past years then your home loan application can still be turned down.
The final reason for a home loan rejection is failing to disclose. Lenders don’t take into considerations those borrowers that fail to mention their credit cards or they have a full-time job when it is indeed casual. Therefore, when the lenders find either a deliberate omission, they will have to review the application so keenly and end up turning down the borrowers’ requests.