How do you now make that dream home a reality? What are the steps you need to take so that this house becomes your first home? If you are ready to purchase a property, you will need to organise your finances before making an offer.
But there are several important decisions you will need to make before handing in a home loan application.
Where do I start?
Before choosing a home loan, it is important to do your research and compare different loans and lenders to see which one will suit you. Looking online is a great place to start and there are financial comparison websites such as Rate City, Canstar and Mozo that compare a wide range of home loans.
Finding out what is available is the first start. Be aware that some loans are only available by going direct to the lender and not through a broker and there could be savings for you in dealing direct. If you are using a broker remember that they can only advise you on loans and lenders on their panels.
What should I look for when comparing home loans?
What you look for in a home loan depends on your own personal goals. You may want to get out of debt as soon as possible and put all extra money towards your repayments or you may prefer stability and sticking to a consistent budget. These goals may affect what type of home loan would suit you best.
Some questions you should considering when comparing home loans are:
• Is the interest rate competitive?
• What about fees and charges?
• Can you make extra repayments without penalty?
• Can you access any of your additional funds easily and without charge?
When should I contact a lender?
After you have compared different lenders, make a list of the lenders you are interested in and then give them a call. Everyone’s situation is different and by speaking to a lender directly, they can assess your own situation one-on-one. The lender should be helping talk you through things such as your total costs including any stamp duty or legal fees, any mortgage insurance that may be payable, and help calculate if you have enough in savings to contribute.
If you are getting close to beginning your property search in earnest and will be wanting to make offers on properties, then it is advisable to get a formal pre approval from a lender you would like to eventually get a loan with. This will give you peace of mind that some of the groundwork has been completed and you will be able to move quickly to approval once your offer is accepted.
Should I apply for a home loan with multiple lenders?
Although it is important to compare different lenders, you should only apply for one home loan at a time. Each time you apply for credit even, the credit provider will need to access your credit report, which will leave an enquiry on your file. Too many enquiries can have a negative impact on your application and lenders may be more cautious as they don’t know whether the enquiry resulted in you changing your mind or being declined. Only apply if you are serious about wanting a particular home loan, not just if you want to see if you will be approved.
What do I do when I am ready to apply?
Each lender will have different ways to apply so speak to them about the best way to get them your information. It will usually involve filling in an application with your personal details, a list of your assets and liabilities and details of the loan your are applying for. A home loan is a significant commitment so the lender will want a complete picture of your circumstances so be prepared to provide documents like payslips, payment summaries, savings statements etc in support of your application. If you provide everything as it is requested this can save time and mean that you can get approval quicker.