Things to do before you apply for a home loan

Before you jump into the wonderful world of home ownership make sure you are prepared before sending your application and applying for a home loan.

When buying a house you’ll likely need to take out a home loan to finance the purchase. Sometimes, applying for a home loan can be quite a challenge.

So to make sure you get approval for your home loan application, here are a few things you should do before you apply for a home loan.

1. Check your credit score

Your credit score will play an important role when you apply for a home loan. Your credit provider will run a credit check and get a copy of your credit history. So it’s best to find out what your credit score is and try to improve your score before applying for a home loan.

2. Pay off your debts

Having too many debts could lessen your chances of getting your home loan application approved. Paying off your debts such as credit card debts, car loans, and other kinds of loans will not only make you look financially healthy to your lender, but it also improves your credit score.

3. Prepare your financial documents

Knowing what financial documents are required ahead of time can save you a lot of time when applying for a home loan. So check with your lender what paperwork is needed to complete the loan application process. The general requirements are:

  • Three months of your recent payslips
  • Six months of your bank statements
  • Two years of your tax returns
  • A list of your other assets
  • A list of your other loan repayments

4. Keep your job

You want to show to your lender that you are stable in your job. To do that, it’s best if you have been employed at the same company for at least 1 to 2 years because some lenders will not look at your application if you’re still under probation.

5. Save more money

A deposit of 20% of the value of the house will be needed. But if you can save more than that it is even better. Apart from the deposit and making the mortgage repayments,  you’ll also need money to cover other expenses such as moving expenses, furnishings, and more.

6. Know how much you can afford

A home loan calculator can give you an idea if you can actually afford the mortgage repayments. This will give you a rough estimate of what your repayments will be. If you can make a higher deposit, it can help reduce your mortgage payments.

Buying your first home is an exciting endeavour. Take the steps above and you should get an approval quickly and smoothly. 

Buying a first home guide

Most people have questions as they start on the home buying journey, so we have pulled together some articles to help you.

From tips on how the home loan process works, to information on pre-approvals and buying a home, you can find it here.
We want to help you at each step of the way, whether you are just starting out, looking at properties, or ready to apply today.

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