Applying for a home loan seems quite a complex affair, especially to someone who has little or no experience with buying real estate, and rather than simply making the application, you are advised to carry out a little research first. To assist you, here is a guide to the home loan approval process.
Credit Score
Every adult Australian has a credit score, which lenders can access when a person submits a loan application, so prior to making a mortgage application, find out what your credit score is. The lower your credit score, the harder it is to get a mortgage application approved, and if you have outstanding debts, you are advised to settle them prior to making a home loan application.
There are specialist mortgage brokers for bad credit home loans you can count on. If you have a less than perfect credit score, talk to an online lender who is experienced with loan applications from people with bad credit scores.
Mortgage Pre-Approval
Prior to hunting for property, you really do need a mortgage pre-approval, which means that, based upon the information you have given, the lender is prepared to accept your loan application. Sellers do not take any person seriously if they do not have mortgage pre-approval, as they know that without it, there are no guarantees that you can make the purchase. There are useful articles you can find online that detail the steps involved in mortgage application, which are must-reads for any new loan applicant.
Mortgage Pre-Qualification
You will likely come across this term during your loan hunting experience, and pre-qualification is not to be confused with pre-approval, as they are two different things. A mortgage pre-qualification is usually given after the lender’s representative has a quick look at the information, whereas pre-approval means that, based on information received, the lender is prepared to accept the proposal.
Mortgage Application Information
When you apply for a home loan, the following information will be required:
- Employment history and details
- Income details
- Credit history
- List of assets
- List of current debts
- Information on the property you wish to acquire
Specialist Mortgage Brokers
If you think that any of the above might not present you in the best light, there are specialist mortgage brokers who can often help a client to get a home loan, despite having a bad credit score. One reason for this is that the security for the loan (the property) will always be there, so the worst-case scenario is property repossession, and lenders always consider the risks. If the property is worth more than the amount borrowed, then technically, the lender cannot lose, although not all mortgage lenders will go that far.
If you are planning to apply for your very first home loan, do some research prior to making a loan application, and by talking to an independent mortgage broker, you can receive the best advice, which is free to the borrower. With the help of an expert, you can quickly negotiate the loan application process and once you have pre-approval, you can begin to look at properties with a view to making an offer.