First Home Buyers’ Checklist for Getting A Mortgage.
It is important to be ready for action when applying for a loan. Here is a checklist of things first home buyers need to do when getting a mortgage.
Organise a meeting with a financial planner and a mortgage broker.
If you feel in the dark about getting a home loan, there is help at hand.
CEO of Zinger Finance, Madhu Karthik Ramana, says first home buyers can greatly benefit from speaking with a financial planner/advisor before entering the loan application process.
A financial planner can help you to identify your financial position and goals before coming up with a strategy. Once you have a clear idea of where you are at, it is best to assess your borrowing power with a mortgage broker.
This is important because it will give you a good idea of the amount you can comfortably borrow. If it isn’t as much as what you were aiming for, it might be time to reassess your plans and come up with a different strategy.
Once a plan has been devised and your borrowing power has been identified, you should be able to move onto the next phase of finding the right loan.
Make sure you have paid all your bills on time.
Preparing for a loan application starts well before you speak with a broker.
Before any lender will consider you as a customer, you must prove to them that you are responsible with your money.
This means making sure that you always pay bills on time and that you never overdraw your account.
Lenders usually ask for three to six months’ worth of bank transaction statements so they can assess your financial conduct.
“The conduct of the accounts is very important,” says Madhu.
He says every time you dishonour a direct debit, miss a payment or overdraw your account it gets registered on your credit report. This can severely affect your chances of being approved for a loan.
Avoid shopping around for loans.
If you get a few different pre-approvals from lenders in a bid to get the best rate, you could actually damage your chance of getting a loan.
Madhu says that each time you get a pre-approval and don’t follow through with it, it will affect your credit score. The poorer your credit score, the less likely you will be approved for a loan.
He says, you should only get a pre-approval if you are sure you will follow through with the loan.
Make sure all your insurances are in place.
Whether you are a homebuyer or an investor, buying property always has a level of risk attached. It is important to make sure you are protected by having an adequate level of insurance cover in place. Depending on your situation, home and contents insurance, landlord’s insurance and income protection insurance are all important policies to consider.
“If you want to get maximum mileage you need to do the groundwork properly and prepare yourself correctly,” says Madhu.
Prepare your payslips or tax returns.
While it varies from bank to bank, pay as you go employees should have at least two consecutive payslips that are no older than four weeks.
If you are self-employed, you should have the last two years’ worth of tax returns to show your lender or broker.
Educate yourself on what is available.
Madhu recommends first home buyers speak with an expert who knows what benefits or grants are available.
He says, depending on how much you are borrowing, you may be able to get up to $30,000 worth of help.
Know what your goals are before getting a mortgage.
It is always important to be clear with yourself as to why you are buying a property. If you want to achieve financial freedom, make sure you map out exactly what this means. How much capital and passive income do you need in order to reach your goal?
If you want to buy a house to live in with the view of buying your dream home further down the track, how will this first purchase help you achieve your goals?
You can’t map out a strategy without first knowing exactly what your goals are. Financial freedom can look very different from one person to the next. Being specific with what you want to achieve will give you better clarity on how to make it happen.