8 ways to boost your chances of loan approval
Must-dos to boost your home loan approval
Voiced by Rebeccah Elley
So, you’ve found the perfect property and are ready to kick off your home loan application. But wait - before you begin there are a few things you need to do to ensure you get your application over the approval line.
First things first, it’s important to check what shape your credit report is in by downloading a free copy online, because how disappointing will it be being rejected due to a small mistake like an out of date debt that was resolved long ago.
Next up you want to show the lender you have genuine savings, as a home deposit by itself is not enough to get you approved for that loan. Keep in mind the lender will want to see at least 3 months’ worth of savings or term deposits statements.
On top of savings, you will also need to show the bank you are managing your current debt, so before you apply for a home loan ensure you are making the full monthly repayment on things like your credit card, car loan or personal loan.
Hate your job? Well unfortunately now is not the time to find a new one as the lender will also want to see 3-6 months’ worth of pay slips. So, hold off before making any career moves before you apply for a loan.
The same goes for taking out any other forms of new credit like a personal loan or credit card as the provider may deem you a riskier borrower if you have too many lines of credit available.
Last but definitely not least, avoid applying for multiple home loans as this again will affect your credit rating negatively.
Instead do your research by using an online comparison tool and narrow down your choice to one home loan that offers a competitive rate, low fees and flexible features too.
Visit mozo.com.au to compare over 550 home loans today.
Getting ready to apply for your first home loan? Run through this checklist first so that your credit profile will be ship shape and you'll have the best chance of getting approved.
Unless you’re fortunate enough to have just won Lotto, you’ll need to get a mortgage from a bank or home loan lender to help you buy your first home.
Every bank tends to have its own lending criteria and for first time buyers it can be unsettling not knowing whether you’ll actually get approved. But there are a number of things you can do to shape up and improve your chances of getting your home loan application accepted, such as:
1. Improving your credit history
Before applying for a home loan, get a free copy of your credit report from Veda, D&B or Experian. This will allow you to see what lenders see when they review your application. Once you have a copy of your report, check everything for errors and if you spot an issue, notify the company responsible immediately. Sometimes it can be something small like a wrong address or an old credit card account you no longer use but haven’t closed.
2. Having proof of genuine savings
It’s likely that you’ve been putting cash away each week in order to save up your first home deposit but if you haven’t, and you were planning to rely on a gift, tax refund or grants like the First Home Owners Grant (FHOG), it is time to start saving.
These days, most lenders have a mandatory genuine savings policy for anyone who applies for a home loan, especially if you are borrowing 90% of the property value or more. You’ll be required to show at least 3 months of genuine savings. Types of savings considered genuine savings are savings accounts, term deposits and mutual funds.
3. Holding off on career changes
You may be thinking that a $100,000 salary will increase the amount you can borrow and you might be right - but if it means making a sudden career change, it may not be the best move when it comes to your mortgage application.
When applying for a home loan your finances will come under a microscope and lenders will want to see that you’ve been in your job for a decent length of time, so save the career changes until after you’ve got your mortgage.
What's more, you’ll need to supply copies of around 3 - 6 months of your most recent payslips to the bank when you apply.
4. Reducing debts as much as possible
In addition to saving for that deposit, you’ll also need to show the lender that you’re able to manage your money responsibly. If you have a car loan or credit card, make more than the minimum monthly repayments.
5. Staying up-to-date on all bills
With the move to comprehensive credit reporting (CCR), lenders will know when and how often you make late payments. It's always best to set up a direct debit for utilities and credit card payments and when you can top up with an extra repayment during the month.
6. Keeping other applications to a minimum
Every application for credit goes on your file (including mobile phones) so in the months before you apply for your home loan, hold off on getting a new phone, TV or any kind of store card until after your mortgage is secure.
7. Breaking with past relationships
If you had joint accounts with an ex and never got around to getting your name removed from the account, now is the time. You don’t want their credit history affecting your application.
This also applies to businesses you may have dealt with in the past but haven’t bothered to close off the account.
8. Living within your means
Good money management skills are a must-have when owning your own property. You might be required to show copies of recent bank statements to prospective lenders to demonstrate that you can live easily within your budget.
Home Loan Comparison Table - last updated 27 April 2024
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Mozo experts choice awards won:
- Exceptional Value Home Lender - 2024
Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
interest rate
comparison rate
Initial monthly repayment6.01% p.a. variable6.14% p.a.Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
CompareCompareExpress Home Loan
Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- Upfront fees
- $134
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $5,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Bendigo Bank Express Home Loan
-
Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
interest rate
comparison rate
Initial monthly repayment6.09% p.a. variable6.09% p.a.Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
CompareCompareDiscounted Home Value Loan
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $15,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the HSBC Discounted Home Value Loan
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment5.99% p.a.
fixed 3 years6.12% p.a.No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
CompareCompareBasic Home Loan
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- Upfront fees
- $350
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - up to $10,000 p.a.
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Basic Home Loan
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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