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Buying a house is an exciting experience and the right home loan can help you ‘own’ your home sooner. Currently, with low interest rates on offer by various banks and non-bank lenders, the Australian mortgage marketplace is full of options for the savvy home buyer.

 
5 simple steps to get a home loan
 

However, many homebuyers find it complicated to apply for a home loan, which needn’t be the case. Here’s how to get a home loan in five easy steps:


Step 1 – Start saving for a deposit

Did you know it can take up to five years to save for a 20 percent deposit for your home loan? A tall order for most homebuyers, indeed. However, if you plan smart, you could boost your savings considerably to put together a larger deposit towards your home.

  • Track your expenditure to cut down wasteful spend
  • Prepare a household budget (and stick to it!)
  • Brew your own coffee or carry home-cooked lunch
  • Take advantage of the First Home Super Saver Scheme
  • Apply for FHOG in your state if you are a first home buyer (check eligibility here)
  • Ask your parents for help (they could contribute to your deposit or guarantee your home loan.

A 20 percent deposit not only enables you to negotiate a better rate on your mortgage but also saves you thousands of dollars on lenders mortgage insurance (LMI). Besides, it is still possible to buy a house with as less as five percent deposit (read more here).


Step 2 – Determine your borrowing capacity

Before you start looking for a home to buy, it is advisable to calculate your borrowing capacity to get an idea of how much you can borrow. You can use this online calculator to know your borrowing capacity by entering your income, expenses and debts.

Next, calculate your mortgage repayments based on the size of the loan you intend to take to make sure you can service the loan over its full term. If you think you cannot meet the monthly repayments without stretching your finances considerably, it is better to borrow less or put the purchase on hold until your financial situation improves.

Remember, lenders are quite strict when it comes to scrutinizing mortgage applications and small mistakes can reduce your borrowing capacity significantly. Thus, it is advisable to take charge of your finances early on and follow these simple tips to boost your borrowing capacity.


Step 3 – Check what features you need in your home loan

Just like people, all home loan products are different and when it comes to your mortgage, the little extras could make a big difference to your pocket. Here’s what you should look for in a home loan:

  • Look beyond the advertised rates to check the actual cost of the loan by reading the term-sheet carefully. Learn about comparison rates here.
  • Understand the difference between fixed and variable rate loans. While a fixed rate protects you from future hikes and allows you to plan your finances better, a variable rate mortgage is usually more feature-rich and flexible (Learn more).
  • Decide between principal and interest (PI) loan or interest-only mortgage. In general, a PI loan is more suitable for owner-occupiers as it is best to pay off the principal while the interest rates are still low.
  • Opt for additional features such as flexible repayments, free redraws and an offset account linked to your mortgage that can save you much more as compared to a vanilla low-interest loan in many cases.

A mortgage broker can help you understand all you need to know about your home loan apart from suggesting the type of loan and features that best-fit your financial situation and vision. You can have your queries answered by expert mortgage brokers online, here.


Step 4 – Compare mortgage rates online

With increasing competition in the mortgage industry, lenders are offering great deals and discounts to home buyers who care to look around.

To get the best home loan deals, start by comparing mortgage rates online to save precious time and money. With HashChing, you can compare broker pre-negotiated rates to find the most competitive home loan deals online.


Step 5 – Apply for a home loan

Once you have decided which home loan to apply for, it is time to file your mortgage application that could be quite cumbersome unless you are on top of your paperwork. Different lenders have different eligibility criteria and you might be required to submit different documents depending on the type of loan you are subscribing for and with whom. A mortgage broker could provide invaluable guidance in this aspect.

Click here for a general list of documents you require while applying for a home loan.

It is advisable to have your home loan pre-approved by filling an online form that is followed by some paperwork and a visit to the lender to understand the product in detail. Alternately, your mortgage broker can apply for a pre-approval on your behalf. However, pre-approval is not the same as final approval and your finances are under scrutiny by the lenders until your loan is finally approved. Thus, it is best to avoid large purchases during pre-approval stage. It is also advisable to review your credit file before applying for a mortgage. Any black mark on your credit file could seriously impact your borrowing capacity and even derail your mortgage application. You can request your credit report for free from Equifax.

Financing a property can be complicated but with proper documentation, clean credit history and an expert by your side, it could be remarkably easy to get a home loan. Verified mortgage brokers at HashChing guide you throughout the process of financing, doing all the legwork on your behalf so that you can focus on other things such as finding the right home for yourself. The best part is brokers do not charge you any fees for their services.

Get more out of your property by partnering with HashChing, Australia’s first online mortgage marketplace offering competitive home loans and on-demand broker services to property buyers in Australia.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.