What lenders want to see

Woman attempts to figure out a loan with pen and calculator
Q. I haven’t applied for a home loan before, so I am not sure what lenders like to see and what they don’t like to see. Could you give me a few suggestions of what can improve my chances of getting a home loan?

A. There are plenty of things you can do to help improve your borrowing power, but it won’t necessarily improve your application overnight. It may take time to improve your financial position.

First and foremost, lenders need to see that you will be able to afford the repayments. You should also try and keep your personal debt to a minimum. Lenders need to see that you have enough surplus cash that can be put towards mortgage repayments. If you have a number of ongoing expenses that you can only just afford, lenders may be wary to let you take on another expenses. 

They also want to see that you have been able to meet repayments in the past and will look at your repayment history. So, it is important you make an effort to pay your bills on time as this may help you get a more competitive home loan.

A good employment history is a big tick for lenders. Most lenders require that you have worked at the same job for at least 6 months and you are not on probation. So, you may be considered a better risk if you have been at the same job for a number of years compared to someone who changed jobs only a few months ago. 

Finally, if you already have a deposit saved, it can help speed up the process and lenders may be able to offer you a better interest rate. Chat to your lender to see what you need to do to get the best possible loan.

More Home Loan Guide