Everybody dreams of having their own home. However, being able to afford one is a challenge for many, even for the above average Aussie employee. Getting a home loan is the most common avenue that people resort to, to be able to afford to buy a home.
There are many types of home loans available for Australians of all economic status. Even people with bad credit can avail a home loan, through non-conforming lenders that entertain bad credit home loan applications.
With so many options available for home financing, is there a right time to avail a home loan? Will a planned or perfectly timed application increase the chances of getting approved or in securing better rates and loan terms?
Timing is Everything When Applying for Mortgage
There exists a mortgage business cycle that is common for almost all lending services. The first weeks of the months is usually spent in finding a client, documents from these clients are then processed up until the early half of the month. The last weeks of the month are dedicated in closing as many possible deals or loan applications since most lending services are aiming to reach a certain quota for their monthly performances. So, which is the right time to file for a mortgage application, with this schedule as your guide?
Considering the enthusiasm that loan brokers have during the start of the month, it would be ideal to file for an application during the first few days of the month. Loan applications are reviewed faster, and your phone calls are even returned promptly during the first few weeks of the month.
But how will you know if it is the right time for YOU to apply for a mortgage?
Get 5 out of 7 checks in this list to consider yourself ready to apply for a home loan.
1. A Better Credit Score
Although you can always apply for a bad credit home loan, a better credit score can do wonders on your loan interest and loan terms. The better your credit standing is, the less risk you are as a client, thus giving you favorable interest terms that can help you save in interests throughout your loan repayment period.
You can always improve your credit score by paying your bills monthly, eliminating debt and removing negative marks on your credit score.
2. Stable Source of Income
A stable source of income gives you the assurance that you have resources available to repay a loan. Although most loan applications do not require a minimum tenure on your current employment, a regular source of income keeps hesitations on your application at bay.
3. Home Rates Are Continuously Increasing
If the current interest rates in home loans in the real estate market are increasing in trend, it would be ideal to secure a home loan now and later. You might want to seize the opportunity of getting a fixed rate home loan at present to protect you from future increases in interest rates in the coming years.
It is also ideal to apply for a mortgage when the market’s trend is going down as well. You can secure a variable interest rate home loan for this type of trend to be able to save in interest rates as home loan rates go own parallel with the current trend of the real estate market.
4. Saved 20% for Down Payment
There are 95%LVR loans that allow you to enjoy a small deposit to secure a mortgage. However, a small deposit is equivalent to a higher interest rate. Securing 20% of the property value as down payment for your home or property purchase helps you enjoy lower interest rates. Saving more than 20% of the valuation of your property gives you better interest rates too. In the process, you’ll be able to pay off your loan faster with a low amount of interest to worry about, with the aid of a higher deposit.
5. Ready to Purchase a Home
It would be ideal to get a mortgage prior to purchasing a home to be able to have an edge over the other people interested in the property you are eyeing on. Some people fail to buy the home of their dreams because they failed to apply for their mortgage early. If you are ready to buy a home, together with all the paper works and personal efforts that go with it, it would be better to apply for a mortgage the soonest possible time.
6. Dual Income with No Kids
Having two merged incomes and no kids gives you the maximum amount available to purchase a home or repay a mortgage. It would be ideal to invest in a home, prior to having kids due to the extra expenses that come with parenthood.
7. After Talking to a Loan Specialists
A loan specialist can give you expertise in deciding whether it is time for you to apply for a mortgage and purchase a home or not. They are up to date with the market changes, informed with the current trends, connected with the right people, banks and lenders that may affect your mortgage application, and honestly willing to help you access your circumstances vs your capacity to repay a mortgage. It would be ideal to get advice from this people not only to increase your chances of getting a mortgage approved. They will also help you understand if it is really the perfect time for you to apply for a home loan.
Are you currently in the same situation mentioned above? If your answer is YES, Intellichoice can help you take the first step in securing your dream home through a mortgage. Call 1300 55 10 45 to talk to an expert Intellichoice broker today.