8 ways to boost your chances of loan approval
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 January 21, 2021
Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
Sorted by:
Mozo Order
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
Smart Booster Home Loan
1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
1.99% p.a.variable for 12 months and then 2.48% p.a. variable
2.47% p.a.
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.
Go to siteCompare2.34% p.a. variable
2.34% p.a.
UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
2.34% p.a. variable
2.34% p.a.
Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.
Go to siteCompare2.19% p.a. variable
2.19% p.a.
Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
2.19% p.a. variable
2.19% p.a.
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
Go to siteCompare2.04% p.a.
fixed 2 years2.79% p.a.
Special Offer Reward Me Fixed Rate Home Loan
Owner Occupier, LVR <80%, 300k+
2.04% p.a.
fixed 2 years2.79% p.a.
Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.
Go to siteCompare2.09% p.a.
fixed 2 years2.56% p.a.
Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR 70-80%
2.09% p.a.
fixed 2 years2.56% p.a.
Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.
Go to siteCompare
^See information about the Mozo Experts Choice Home Loans Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.