Scratching up the funds for a deposit is arguably the biggest stumbling block to purchasing a home. But what if there’s more to it than that? We chat to local property developer and Urbex General Manager Wayne Rex and Tony Schelling of Mortgage Choice about what you need to know.
What do I need to consider?
The days of simply saving a deposit for a home loan and talking with your bank manager are long gone. Since the introduction of a new Comprehensive Credit Reporting system this year, lenders and financial institutions now have the ability to not only look at your credit history, but also how financially responsible you are. This includes access to payment history information such as late payments and overdue bills. To ensure you get the tick of approval to finance the home of your dreams, make sure you pay your bills on time.
What is a pre-approval and do I need it?
Obtaining a pre- approval from a lender is an essential step to understanding your borrowing capacity and ability to afford a home loan. Everyone should meet with their lender or bank to understand their financial limits before looking to purchase. It is also important to note however that finance pre-approval for a home loan isn’t always a financial guarantee. Many of the big four banks assess applications for pre-approval based on the information that you provide to them and a basic credit check without undertaking a more stringent financial assessment.
Do you have any tips?
Keep an open mind when you’re given financial advice. For example, if a lender suggests that you consider using a family member to guarantee and secure your loan or take advantage of the Northern Territory Government’s housing affordability scheme, weigh up the benefits before you make judgement. Is it really that bad that your Mum or Dad helped you purchase your first home if it saved you tens of thousands of dollars, or that you’re required to live in the home for a minimum of three years to qualify for the government incentives? Solid financial advice is key and can save you thousands in years to come, so listen with open ears and an open mind.