Step 1 - Chat with your broker about getting a loan

As soon as you start thinking about buying a property you should talk to a broker about your situation, your goals and timeframes.

We can meet in person, on the phone or via video conference. At this meeting I will ask you lots of questions about your employment, savings, debts, address history, dependent children etc.

This information lets me calculate whether I think you will be able to buy a property now, or later.

If it isn't possible to proceed at this stage, we can make a plan of what is required so that you can proceed in a suitable timeframe.

Book your broker meeting

What should you have ready for this meeting?

• Your drivers license or passport so I can verify your ID

• Details of your salary or a recent pay slip

• Know what your superannuation balance is

• Know what your assets are & their worth eg shares, cars, boats, contents

• Know what your liabilities are - your credit card limits, details of any loans or buy now pay later balances.

  
  

When should I meet with a broker?

It is never too soon to chat to a broker. We can work out a saving plan so that you will have enough of a deposit when you are ready to buy. It is also never too late to chat to a broker. If you have found the perfect property and don't know if you can afford it or get a loan, get in touch and we will see what is possible. I don't recommend this, it is the high stress approach and you may miss out on the property because you aren't pre-approved.

Tips for getting your loan approved

Credit Score

At some stage of your loan application journey, your broker or lender will run a credit report. This will show your score and details of applications for credit for the past 5 years along with any defaults or late payments. The report may also list your residential addresses and employers.

Frequent credit enquiries (even if not proceeded with), frequent changes of address and employment may lower your credit score. Some lenders will not lend to a person simply because their score is low. Other lenders will only have an issue if there are late payments or defaults.

You should avoid applying for loans and credit cards if you are planning on applying for a home loan.

Bank Statements

Most lenders will want to see three months' living expenses and loan / credit card statements - so three months before applying for a loan, try to limit your spending and avoid potential red flags on your bank statements such as excessive gambling, alcohol purchases and missed repayments.

Income

You do need to be able to afford a loan. You can include salary, most government benefits, child support and investment income. Lenders will sometimes only use a % of some income (eg 80% of bonus income), and if you have a new job in a new industry, you may need to wait until any probation period has passed. Casual employees may need to show a track record of consistent income in that role, and lenders may only use 48 weeks income to allow for holidays and illness.

Deposit

In an ideal world, lenders would like to see loan applicants with a 20% deposit plus stamp duty. However, there are options for people with less than 20%. First home buyers may qualify for a first home buyer scheme where they only need a 5% deposit. However, the smaller the deposit, the larger the loan. So you need to think about whether this is right for you. If you don't qualify for this, you can pay for lenders mortgage insurance (LMI), this protects the lender and can be expensive, but it is worthwhile in some situations. Generally the smaller your deposit, the more evidence the lender will require to show that this is genuine savings that you have built up or held for a period of at least 3 months.