How to fast-track your home loan application

​One of the biggest mistakes new home buyers make is not having their finances organised prior to starting their search for a property.
 
Many people assume that if one has a good income, a home loan is simple to get. Unfortunately, there are a number of steps in the process, and it often takes many weeks or even months to get everything formally approved.
 
By far, the best option is to seek pre-approval before even starting the search for a new home. A pre-approval will allow you to know exactly how much you can spend and give you confidence that your loan application has a high chance of success when the time comes.
 
However, there are still several steps you can take to fast-track the home loan application process, whether that’s pre-approval or unconditional approval.
 
Boost Your Deposit
 
Lenders like to see, firstly, that a potential borrower can manage money and that they represent a low level of risk.
 
The best way to do this is to come up with a larger deposit. Normally, lenders like to see 20%, and anything less than that will mean that you’ll likely be forced to pay Lender’s Mortgage Insurance (LMI).
 
LMI is a one-off insurance premium that the borrower is required to pay to protect the lender in the event of a default.
 
If you’re putting down a larger deposit, you will not need to pay LMI, which makes the loan application process easier. It also opens you up to more lenders who will be willing to take you on.
 
Reduce other debts
 
When a lender is assessing your loan application, they are really assessing how likely you are to be able to continue to make repayments on any money they lend to you.
 
If you already have large debts, particularly unsecured debts such as credit cards, it can make your application less appealing.
 
If you are in a position to do so, it is well worth paying down all of your smaller debts or consolidating them.
 
It is worth noting that lenders are also very interested in your overall borrowing limit when it comes to things like credit cards. Even if you don’t use that limit, they assess you as if you do. If you don’t need that extra capacity, it might be worth reducing your credit card limits.
 
Check your credit record
 
The very first thing most lenders are going to do when you apply for a home loan is take a close look at your credit record and credit score.
 
Your credit record is your track record of how you have managed credit in the past. It contains a list of all the times you’ve applied for credit, records any missed payments and even shows if you’ve paid on time or early.
 
The good news is that if you’ve been diligent with your repayments in the past, this will be reflected in a good credit score. However, if you’ve had a few issues, you can still turn things around.
 
Start by making all your repayments on time and pay your bills the day you receive them. If you’re having trouble with current debts, it might be worth looking to consolidate them and tidying up your finances.
 
Make sure your credit history is in order, and this will dramatically speed up your application process.

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