5 things to know before applying for a home loan.

Hoping to buy your own home? Before you start celebrating the joy of nailing paintings into the wall without fear, you’ll need to apply for a home loan. Our guide to getting home loan approval spells it out for you.

If you’re wondering how to apply for a home loan and finding it a bit daunting, you’re not alone. There’s a lot riding on getting it right and there are no guarantees.

This guide will help you understand what you’ll need to get your home loan over the line. Tip: the more prepared you are, the more likely it is you’ll meet bank lending criteria and get home loan approval from your lender.

Here are some things to think about before trying to get home loan approval:

Figuring out your financial position is key.

If you’re wondering, ‘how do I get pre-approved for a home loan?’ then you’re in the right place.  Firstly, a lender wants to know that you can afford to make your repayments. Having a deposit saved and a steady income is important, but being eligible for a home loan isn’t only about how much you earn – lenders will also consider other assets and how much you spend.

To get the ball rolling, you’ll need to declare any assets in your name, any other loans or debts you have (like car finance or personal loans) and an estimate of your living expenses, including how much you’re really spending on those good corn chips. In the months (or longer) before you apply, it’s a good idea to see where you can trim your expenses down. That might mean cutting back on takeaway and nights out at the pub, cancelling streaming subscriptions and reducing impulse purchases you can live without.

Lenders will ask for the total limit on your credit cards – that’s the amount of credit available to you. Even if you don’t owe anything, your lender will likely still consider the total limit to be a liability. You can boost your application by paying off and cancelling unused cards or reducing your credit card limit before you apply.

Consider the Home Guarantee scheme or Help to Buy scheme.

If you’re struggling to save for a deposit and want to boost your chances of getting a home loan over the line, your success rate might be improved by applying for one of the Federal Government’s schemes that support first home buyers, including the Home Guarantee scheme and Help to Buy scheme.

These schemes are especially helpful if you’re finding it difficult to save the 10–20 per cent deposit most lenders require to qualify for a home loan or if you don’t have a family member (hello, bank of mum and dad) to be a guarantor for the loan.

Taking time to explore your home loan options is wise.

There’s a wide variety of home loans to choose from. Before you apply, it’s good to consider what type of home loan you want. To help figure out which one is right for you, look into the key things you want and need from your home loan, including things like offset accounts, redraw options and loan terms.
Online tools can help you understand how much you can afford to borrow, like our handy borrowing power calculator or home loan calculator to work out the repayment amounts you can realistically factor into your budget.

Speak to a ME Mobile Banker if you want the lowdown on all the different features, rates and fees, so you can get the right product from the get-go.

How long does a home loan take to get approved? 

Once you have decided which home loan is right for you, you can complete your application. The time it takes to be approved varies between lenders and depends on many different factors, but pre-approval (also known as conditional approval) can typically take anything from a few hours to a few days.
 
The best part is you can kick-off your home loan application online from the comfort of your couch. Later, your lender will contact you to ask questions and progress the application further.  

Getting your paperwork in order is essential.

Whether you’re hoping to buy an investment property or your very first home to live in, you’ll need to supply plenty of paperwork to prove your identity and income. That includes:

• at least two consecutive payslips
• a copy of your latest PAYG Summary or Notice of Assessment from the ATO
• any bank statements showing other income, such as Centrelink payments
• your accountant’s details, if you’re self-employed
• evidence you’ve saved for your deposit
• 100 points of ID when you apply.

Get ahead of the game by collating all your records into a folder so you’re ready to supply them when asked.

Enlisting help from professionals will make things easier.

Buying a home doesn’t happen in a vacuum. There are many different professionals involved in the process. Here are a few you might call upon.

Conveyancers or solicitors. 

As you reach the end of your application, you’ll be asked to provide details of your solicitor or conveyancer. Having your legal professional lined up before you’re ready to apply for a loan will speed up the paperwork.

Accountants and financial professionals. 

If you’re buying an investment property, you may want to enlist the help of an accountant too. They will help you work out what tax deductions you’ll be eligible for in the future.

Buyer’s advocates. 

Some buyers enlist the help of a buyer’s advocate to talk to real estate agents and bid on auctions on their behalf. If you’re prone to getting tongue-tied and are nervous about bidding at an auction or negotiating a sale with an agent, this might be an option for you. 

ME Mobile Banking manager.

Your ME mobile banking manager is another expert who can help make the home buying process run more smoothly, by providing advice and updates on how the application is progressing.

Applying for a home loan doesn’t have to be difficult. Do you research, buy a fancy ring-binder folder, make copies of everything you submit and take it one step at a time. You’ll be in your new home before you know it.