Banks are making it harder to get a home loan, especially if you’re a property investor. So, now more than ever, it’s important not to give the banks reasons to reject your application, according to Nathan Birch, founder of buyer’s agency B Invested and owner of nearly 200 investment properties.

Birch said the lending market is very different from what it was two years ago. “Gone are the days of asking for the cheapest interest rate from a broker. Now it is more like asking who will lend me the money and on what terms,” he said.

Curbs on property investor borrowing were introduced recently by the Australian Prudential Regulation Authority (APRA) to bring the lending market under control and reduce the risk of a real estate bubble causing a massive decline.

Birch said prospective borrowers could be sabotaging their own chances without even realising it in the following ways:

1. Multiple credit cards with generous limits

If you have three credit cards with $10,000 limits on each, the bank will assume you need a $30,000 credit buffer to maintain your lifestyle, even if you rarely use the cards.

“If your bills only reach $2,000 each month, reduce your limit,” Birch said. “Restrict yourself to one card. You will save on annual fees and look like a more responsible borrower to the banks.”

2. A bad credit score

Past unpaid bills or late payments may have impacted your credit score, even if these slips were accidental. Before you apply for a loan, obtain a copy of your credit score for free from online providers, such as Get Credit Score and Credit Simple, and try and fix any negative marks against your name.

3. Personal and unsecured loans

These types of loans are the definition of bad debt in the banks’ eyes. Why? Because they’re not attached to any assets. If you want to improve your chances of getting approved, it’s wise to minimise or pay off any personal and unsecured loans before you apply.

4. Switching jobs or starting a new business

Leaving your current job or starting your own business is not a wise move when you’re about to apply for a home loan. Banks need proof of a stable income source for 12 months or more, and will be wary of applicants who are on probation at a new job or are struggling to get a new business off the ground.

5. Applying for too many home loans

Every time you apply for a home loan or make a credit inquiry means points against your credit score, as banks will assume you were rejected by other lenders.

A good mortgage broker can help you find a loan that suits you before you apply, Birch said.