Whether you’re buying a new home or your very first one, time is of the essence. Once you’re ready, it’s best to strike while the iron’s hot. However, complications, inconveniences, and other things can get in your way—notably, during the stage when you’re applying for a home loan. The best way to ensure that you get to live in your home as soon as possible is by preparing a few things.
Applying for a home loan should not drag on. Failure to prepare and can all but ensure that you will be waiting a while to buy your dream home. And by then, it might be too late.
Here is everything you need to make sure there aren’t too many roadblocks on your way to your new home:
Organise All Your Paperwork
Before you even decide to buy a new house, if you know that it’s something you want in the future, you should already have everything gathered and organised, preferably with a few copies. This can ensure that whatever document your broker or the lender’s asks of you, you will be ready to provide it.
Some of the paperwork you should already have are:
- Identification documents
- Proof of income such as several weeks of payslips
- Evidence of savings—usually copies of savings account statements
- Proof of other assets you own, such as cars or investment properties
- Details and documents of any debts you owe.
Your broker can explain exactly which documents you need for your home loan application. Having these at the ready, however, can significantly cut your waiting time down and speed up the process of applying.
Get a Pre-approval
While not strictly necessary, getting a pre-approval can seriously increase your chances of getting your home loan as soon as possible. Home loan pre-approval is a non-binding agreement between you and your lender that they will lend you a certain amount of money to purchase a home.
This is based on a short initial assessment to determine your capability and trustworthiness to pay back the loan.
Grow a Deposit
Buying a home involves many upfront costs like stamp duty, legal fees, and pre-purchase pest and building inspections. By the time you decide to buy a new home and apply for a home loan, you should already have at least 10 to 15 per cent saved up to cover the costs.
First time home buyers are lucky enough that they only need deposits as low as five per cent. Create a realistic savings plan that you can consistently put money into. Ideally, you should have a savings account before you ever decide to buy a home. The more you save, the less you have to worry about when the time comes to apply for a home loan.
Settle Most (if not all) Your Debts
Purchasing a home is a significant investment. Depending on your financial situation, you will be paying for it for a few years. When that time comes, other debts might put a financial strain on you because not only do you have a home loan to take care of, you also have other house related costs to think about.
Being debt-free also works in your favour to make sure that your home loan gets approved faster. This shows lenders that you are responsible and trustworthy because this is proof that you have successfully settled other debts. Lenders always want clients that can comfortably pay for home loans.
The Bottom Line
The best path to your home loan approval is to prepare now. You can have these ready months in advance or as soon as you decide that you would like to buy a home. Sometimes, the only reason the process can drag on for so long is that someone is ill-prepared and disorganised. As long as you get your affairs in order and organise your requirements, you should get that home loan at the earliest possible time.
If you are looking for help to speed up the process and find the perfect loan to get your dream home, we can help you. FinanceCorp is a financing firm committed to helping our clients get the best home loan to suit their needs and goals. All of the Finance Managers at FinanceCorp are fully qualified, experienced mortgage professionals who live and breathe finance. You can contact us online or find us in Perth, where we’re based.