Around 535,000 homes were sold last year in Australia, but this will increase by 2023 as prices are plummeting.
With more Australians applying for home loan applications, it’s important to know the common mistakes, so that it doesn’t affect you. Otherwise, you could miss out on your dream home and slow down the buying process. Maybe that’s why you’re here; you want to apply for a loan and need a nudge in the right direction.
Sounds like you? Luckily, you’ve stumbled across the right post. Here are the top home loan application mistakes.
1. Bidding at Auction Without Getting Pre-Approved
When buying a home, especially at auction, you must be pre-approved for a loan. Regardless of how much you think you can borrow, the house is legally yours once bought at an auction.
Because of this, you don’t want to be in the position of owning a property you can’t afford.
2. Not Researching Different Home Loan Rates
Make sure you compare home loan rates before taking the plunge. Whether you’re considering a bank or no deposit home loans, you don’t want to choose the first option because there could be other offers.
If you’re feeling overwhelmed, work with a broker and they’ll guide you through the process.
3. Making a Large Deposit into Your Savings
Once you’ve passed the basic home loan qualifications, avoid adding a large deposit into your savings.
Although it sounds counterintuitive, lenders may be suspicious if there’s been a spike in your funds. To avoid this problem, steadily grow your savings instead.
4. Not Knowing Your Credit Score
Every loan application process requires proof of your credit score. Remember, this data is the first thing that lenders look at and can impact your application.
For instance, if you have a poor credit history, the bank is less likely to take you on board.
5. Applying During Significant Life Changes
Another mistake is applying for a loan during a tumultuous time in your life. Lenders want borrowers who are in a stable financial situation so that repayment is guaranteed. But if you’re currently in a probation period with an employer or are switching careers, your loan will be less likely to be accepted.
Instead, be mindful during these periods and only apply when you’re able.
6. Missing Loan Repayments
Your home loan provider will reject your application if you can’t make the monthly payments. This is especially true if you’ve struggled to repay loans in the past. But don’t worry if there’s been a one-off situation because most lenders won’t hold that against you.
If you have had issues, contact professional mortgage brokers to find the best financial solutions for you.
Avoid These Home Loan Application Mistakes
Hopefully, you’ll avoid making these home loan application mistakes.
There are many common errors, such as missing previous loan repayments and bidding when you haven’t been pre-approved for a mortgage loan. Buyers should also shop around for the best rates and know their credit score from the get-go. Good luck!
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