If you’re looking at becoming an Australian property owner, you’ll probably be like the vast majority of people who can’t pay 100% of the cost of the property and require a mortgage. Getting your mortgage is important. Not only will it determine whether or not you’ll be able to buy a home right now but it’ll have a major impact on your finances for the foreseeable future, too.
Shopping for a mortgage isn’t as easy as shopping for, say, a car. You don’t really have the negotiating / haggling power you’d have with smaller purchases. But you can increase your chances of getting approved and getting a favourable interest rate by looking good on paper.
Here are some tips for increasing your chance of getting approved for a mortgage:
- Look good on paper. Check your credit report to see what you’ll look like to potential lenders. Is your credit report blemished? Are there any errors? If you’re just starting to think about your mortgage process and aren’t ready to apply just yet, spend a good six months or so working on improving your credit report by paying things on time, making sure there’s nothing erroneous listed, and paying things down so it doesn’t look like you’ve already got a lot of debt to contend with.
- Paperwork. Make sure you’ve got income verification, information on your expenses, that you’re current with your taxes, and so on. If you’re self-employed, you’ll need several years’ worth of tax documentation for income verification.
- Money. Do you have enough money for a down payment and for closing costs? Do you have additional savings that demonstrates your ability to manage your finances? Again, make sure you are not maxed out on your credit cards when you apply for a mortgage.
Tip: Get a pre-approval before you start house hunting!
Getting pre-approved before shopping for your Australian property is smart. You’ll know how much you can qualify for and that you can, in fact, qualify. This will make the process easier and reduce the chances of your getting your heart set on something that’s not feasible.