How hard is it to get a mortgage in Australia?

The short answer is, it depends. It may be easier for some than it is for others. Home loan applications can differ based on the lender’s criteria and the borrower’s situation. 

The home loan application process alone varies from lender to lender. If you’re borrowing from a traditional lender, you may have to take off a day or two to take care of the many forms and submit the documents required. Meanwhile, some lenders offer an easier online home loan application process that’s quicker and more convenient. 

A borrower’s financial situation can also affect their chances of getting a home loan. During the application, the lender will review a borrower’s credit and financial history carefully to assess their risk factor and ensure they’re able to pay back the loan. 

Even though there’s a lot of subjectivity around getting a mortgage, there are a few universal truths that can help you during your application. 

Factors that affect the chances of mortgage approval 

Aside from the basic home loan requirements and eligibility, you need to meet the lending criteria set by the lender. Every lender has a standard they measure potential borrowers against. Common factors that affect your chances of being approved are: 

Income 

Lenders will ask for proof of income, such as payslips, bank statements, and the like. This is to assess whether you’re able to afford the repayments. Aside from the income amount, lenders are also looking for stability.  

Those who work full-time usually have a higher chance of being approved for a loan compared to those who don’t. But this doesn’t mean it’s impossible to get a mortgage if you don’t work full-time.  

If you’re self-employed or own a business, you can still get approved for a home loan as long as you can show you have consistent income. You may be required to submit additional documents as proof, depending on the lender’s requirements. 

Savings 

Lenders often look at a borrower’s savings to see whether they’re financially disciplined enough to handle a home loan. When lenders check your savings, they’re not just looking at how much is in your bank account but also how long you’ve been saving for.  

You need to show them you have genuine savings. This type of savings refers to the money you have saved over time. Cash gifts, tax refunds, and the like aren’t typically counted. 

Credit score 

Your credit score is another way for lenders to know whether you’re capable of making your repayments. A high credit score tells lenders that you’re financially responsible, pay bills and debt on time, and have no recent defaults on loans or bankruptcies. 

Those with healthy credit scores are more likely to get approved for loans that have lower interest rates or include useful loan features. If you have a low credit score, there are ways to improve your credit before applying for a home loan. 

Home loan amount 

The amount you borrow can also affect your chances of approval. The more you borrow from the lender, the harder it could be to get approved because it increases the loan repayments. It’s best to check your borrowing capacity first or apply for a pre-approved loan to see how much you could potentially borrow. 

Are there home loans that guarantee approval? 

Lenders who advertise guaranteed home loan approval with no credit checks are likely scammers preying on vulnerable people who need a home loan. These ‘too good to be true’ home loan offers are used to trick people into paying fees or providing sensitive financial information. 

A legitimate lender will always conduct a credit check and review any potential borrower’s application thoroughly. Real lenders will also not pressure borrowers into taking out a loan or request advance payments to secure a certain interest rate. 

Tips for securing a home loan 

Here are a few ways you can improve your chances of home loan approval: 

Avoid applying to multiple lenders 

When you apply for a loan, the lender will request a review of your credit, which results in a hard credit check. When this happens, your credit score can get docked a few points. So, if you apply for multiple loans at once, your credit could suffer. And you may be flagged as a risky borrower. 

Prepare all the needed documents 

Having all the documents needed for your home loan application can streamline the application process. If you can’t provide the needed documents, it might stall the application. The lender may also reject the application due to failure to comply with the requirements. 

Look for the right lender 

Choosing the right lender is crucial for a successful home loan. Before anything else, you need to do your research and find a lender that meets your needs. Aside from loan interest rates and loan features, you should also think about their customer service. 

Need a home loan? Get in touch with loans.com.au 

At loans.com.au, we offer a range home loan options for you to choose from. Our friendly lending specialists would be more than happy to assist you if you want to learn more. You can also get a head start on your home loan by applying online!  

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