Give yourself the best chance of securing a mortgage with these expert tips

Most Australians understand the value of borrowing.

A loan can secure a home for your family. It can grow your business. It can cultivate your long-term wealth. In other words, a loan can help you achieve something you might not be able to on your own. But in order to harness the benefits of borrowing, you need to be able to prove your credibility first.

So how can you prove your trustworthiness to a lender today? In this article, we walk you through how to make a successful loan application. That way you can put your best foot forward when you take your shot at a mortgage.

How to make a successful loan application

Being able to secure a mortgage is not always as easy as we would like. A 2023 report by the Australian Housing and Urban Research Institute (AHURI) found that only 11% of aspiring first home buyers don’t face borrowing constraints. Around 84% of first home buyers said they were restricted because of down payment demands. For 71%, it’s because of an inability to meet repayments.

But there are things you can do to give you the best chance of securing a loan and making your home ownership dream a reality.

Step 1. Work on your credit score

Lenders obviously want to check your reliability before they lend you a huge sum of money. Your credit score gives them a great indication of that. It shows whether you’ve paid off your bills, credit cards and other loans on time.

You can find your credit score online. Anywhere from 500 and above is considered decent, with 850 and above being excellent. When thinking about how to make a successful loan application, improving your credit score should be one of your first moves.

Do this by paying bills on time, reducing credit card limits and paying off debts where possible.

Step 2. Be strict with your budget

If you are serious about securing a loan, get serious on your budget. Revise it with a fine-tooth comb and make cuts wherever possible. Now is the time to consider whether you can forgo life’s little luxuries for a while, if it could lead to a new home.

Step 3. Pay down your debts

Debts don’t look great to a lender. They want to know that you will be focusing on paying back your home loan – not juggling multiple repayments.

Reducing your debts will also help your credit score. We know this can be difficult with the current cost of living. In this case, consider debt consolidation as a first step.

Step 4. Focus on building that deposit

The greater your deposit, the better your chances of getting a loan (and the more money you’ll have to spend on your property). When it comes to how much deposit you’ll need, you’ll typically want to save at least 20% of the value of the property to avoid paying LMI.

There are many different things you can do to build your deposit, such as taking advantage of government schemes, automating your savings etc.

Step 5. Get your records and documents organised

Maybe your mum still has your citizenship certificate or you forgot your banking password. Lenders have no time for excuses.

Make a list of all the documents you might need to make your application, such as bank statements and tax returns. Find hard copies or print out copies from online.

Step 6. Put honesty above all else

We know you want to put your application in the best light. And you may be tempted to hide some spendings or allude to an imminent promotion. But dishonesty will only hurt you in the long run.

Prioritise the truth, even above getting the tick of approval. Lenders and brokers are here to help you. But they can only do that if you are honest with them.

Step 7. Choose the right loan product for you

Home buyers have many different options. Banks vs non-banks. Traditional loans vs non-traditional. Research the market to decide what’s best for you now and into the future.

Choosing the right loan and lender can make a difference to how successful your home loan application is. For example, if you’re self-employed, a traditional loan application might get rejected, but you might be approved for a specialty loan.

Step 8. Get expert, personalised advice

Mortgage brokers and financial advisors can help fill any gaps in your knowledge. They can share professional tips on how to get your finances in order and how to make a successful loan application. They might also know about lenders and loan products you don’t.

For example, Lending Loop has access to over 40 of Australia’s biggest banks and specialist lenders. They can look at your unique situation, compare rates and advise on the best product for you.

There are also other experts who can help you in the bid to buy a property, such as the property wizards at Hello Haus.

Need more advice on how to make a successful loan application?

Mortgage brokers can do the hard yards for you. Give the Lending Loop team a call today and get you started on your home ownership journey!