North Brisbane Home Loans have compiled expert tips on how to take the stress out of applying for your first home loan North Brisbane.
We know buying your first home is an exciting step – and big milestone in your life but can also bring with it lots of worry and unsure moments.
So, to help our very own mortgage broker expert, Pat Cranshaw answers all your tough questions.
What are the biggest reasons first home owners get knocked back by the banks?
Forgetting that they may have had a vet bill or an engagement ring or something that they put on credit with a store or provider to pay back. However, it did not trigger with them as it was not a credit card or a personal loan. Afterpay also needs to be accounted for as a credit facility.
Getting pre-approved and then changing jobs shortly afterwards.
It’s best not to have any major changes to your personal situation unless you absolutely have to during this period of time. This can be overcome sometimes, but it is a credit critical issue that the lenders will need to be covered off on.
Credit report adverse.
Not knowing about an unpaid Telstra or gas bill from years ago when you were renting or similar. It might sound miniscule but can also impact whether the banks are comfortable lending to you.
Bank statements showing transaction accounts overdrawn.
Even by just $1. This shows the bank that you cannot keep your spending under control. For example, something like Uber which is happy to take a payment from your account 1-2 days after using the service. Even if the bank pays it, they will probably charge a fee or at the least it will show up as taking your account overdrawn. This is not a good look.
What paperwork/evidence do first home owners need to provide? Are there extra requirements for first home owners?
This depends on the size of the deposit. But normally up to say 10% deposit – first home buyers need to show minimum 3 months period of savings via bank statements to prove a genuine savings history.
They also need to show living expenses by way of all accounts that are used to run their life. In summary, you need to show the bank your spending patterns and that you can able to meet the additional loan payments and still be okay in terms of covering your day-to-day living costs.
How do lenders assess first home owners?
Primarily, lenders are keen to know how the deposit has come about. Also, how much income first home buyers have to be able to service a loan as well as pay for everything else to live. Normally 3 months of bank statements are needed to show living expenses for clients.
It is important that clients understand that you can’t just write down what you think it costs to run the household to make it “fit”. Banks have a minimum amount and also peruse bank statements to verify what is disclosed is close to the actual figures.
If possible – look at reducing any personal debt you may have. Leading into your application make some changes to how you would be living if you actually had the home loan approved, this way it looks better on paper.
Any tips for first home owners?
- Be honest with your mortgage broker – they are acting for you.
- Avoid changing jobs while applying for a home loan.
- Do not spend the deposit saved – especially if looking to place an offer.
- Get your finances in the best order you can.
- Pay down debt.
- Boost savings.
- Don’t forget to allow for extra expenses like moving, and all the associated relocation costs – power and phone set up costs etc. Check out our special partner offers for great rates on discounts on all these “extras” associated with moving.
- Have a buffer.
- Know your credit score upfront so there are no surprises.
When should a first home buyer connect with a mortgage broker?
We have many first home buyers come to us to get a feel for what they should be focussing on prior to getting pre-approved.
Everyone’s situation is different but 6 months out or prior to when you intend to purchase is generally a good timeline – as you can make some changes if necessary in that period to get yourself into the best position possible to get approved by a lender without any hassles.
Any budgeting/saving for a deposit tips?
- Make it simple.
- Work out the minimum costs you need to run your life.
- Split your pay.
- Put the costs to run your life including a reasonable spending amount on yourself into a separate account. And move the other portion into a bank account that is not with your current bank. Make it harder to get access to it.
- Set yourself an achievable savings goal.
- Get some help. Engage a spending planner or someone who has the ability to show you how to live and save without feeling trapped like you are on a budget. We have a contact here to assist you with making it easier.
North Brisbane Home Loans is Brisbane’s leading mortgage brokers with more than 90 years’ combined experience.
We offer expert advice on a huge range of services including First Home Loans, Purchasing Your Next Home, Refinancing or Home Loans for Self-Employed. Contact us today on 07 3889 9719 or enquire online today!