Tips to Enhance Your Finances and Boost Your Home Loan Eligibility
When it comes to securing a home loan, your income, expenses, assets, and debts all play a significant role. However, lenders also consider your savings and credit history. Here are some practical steps to enhance both of these aspects.
1. Create a Savings Plan
According to the BT Australian Financial Health Index, one-third of individuals live from paycheque to paycheque. Another one-third falls under the category of “Could Do Better,” while only 35% have a solid savings plan. To improve your chances of getting a loan, you should strive to be in the 35% category. Even if you manage to save a considerable amount for the deposit, lenders want proof that you are a consistent saver. Having a sound savings record indicates to them that you will make timely home loan repayments. Even if your savings have been sporadic in the past, banks favourably view a record that shows six months of diligent saving. Therefore, set up a dedicated “House” account and start saving today.
2. Create a Realistic Budget
Maintaining a budget and adhering to it diligently is another indicator of financial responsibility to a lender. Your budget should be practical, taking into account all your expenditures, including small expenses that are often overlooked. It should also be disciplined and require a degree of sacrifice since you are working toward a long-term objective. Additionally, your budget should be flexible, allowing for contingencies, and unexpected expenses. Keeping track of your spending is an excellent strategy to remain within your budget.
3. Reduce Your Debt
Having significant overdraft and credit card debt is not ideal when applying for a home loan. Therefore, you should focus on reducing your debt to increase your chances of loan approval. Consolidating your debt into a single repayment each month may be necessary, and balance transfers could help lower the interest rate if used wisely. Banks also consider your credit card limits, even if you are not in debt, as they assess your total potential risk exposure. You might want to consider reducing your credit limits or the number of cards you own to improve your eligibility.
Contact us to learn more about enhancing your finances and improving your chances of getting a home loan.
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This article has been prepared by United Global Capital Pty Ltd (ACN: 154 158 273, ABN: 25 154 158 273, AFSL: 496179).
This article contains general information only and is not intended to provide any person with financial advice. It does not take into account any person’s (or class of persons) investment objectives, financial situation or particular needs, and should not be used as the basis for making any investment or financial decisions. United Global Capital Pty Ltd does not make any representation as to the accuracy, completeness, relevance or suitability of the information, conclusions, recommendations or opinions contained in this article (including, but not limited to any forecasts made). No liability is accepted by United Global Capital Pty Ltd or its directors, officers, employees, agents or advisors for any such information, conclusions, recommendations or opinions to the fullest extent possible under applicable laws.
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