Wednesday, April 06, 2005

Mortgage Application Tips

Obtaining a Home Loan in Australia

When you are planning to buy a home it is important to get pre-approved for a mortgage before you even starting looking at houses. Sellers will be more likely to accept your offer if you are already approved for a mortgage. A seller does not want to take the chance on accepting an offer from a potential buyer who may not be able to qualify for finance when there are other buyers who are already approved. Here are some tips to increase your chances of getting pre-approved for a loan.

The very best tip we can offer is to use a mortgage broker to find the right loan, and to prepare the loan application. There is no substitute for experience and brokers understand the application process and the banks requirements, making the process much simpler than doing it on your own. I wasted lots of time and effort applying to 3 banks and was rejected by each but a mortgage broker was able to obtain a loan for me without any trouble. If you don't know a broker, see our recommendation at the bottom of the page.

Pre-Application Considerations

This goes without saying, but be honest about everything on your application.
If you will be borrowing your down payment from a relative be sure to do it more than six months before you apply for your home loan. Lenders will typically not allow you to borrow your down payment. Some lenders will accept this situation if your relative provides a statement that money is a gift without repayment obligations.

Request a copy of your credit report and review for mistakes. If there are any errors attempt to clean up before you submit your application. You can send a letter with documented proof to the credit bureau requesting a correction of the mistake.

Catch up on all bills and continue to pay all your bills on time. Late payments can hurt your credit and your ability to get approved for a loan.

If you have too many debts consider consolidating these loans. Too many debts can cause lenders to question whether you will be able to take on additional payments.

Mortgage Application Tips continued...