Mortgage applications: a step-by-step guide
Buying a new property is an exciting time.
Whether it’s your first, second, or even third property, you’re about to embark on a new adventure. In order to make that property yours though, you’ll likely need to go through the mortgage application process to secure finances. To make the process a little easier, we’ve compiled a step-by-step guide.
Get your finances in shape
Getting your finances in shape ahead of applying for a mortgage increases your chances of quicker approval. It can also give you access to better loan products. Check that everything is normal on your credit profile. Maintain a good financial history for at least three to six months before submitting your mortgage application.
Determine your earning profile for the foreseeable future, as well as the earnings of those you’re making an application with. During this process, predict how much of a deposit you’ll need and how you’ll manage to save for it.
Check your grant eligibility
In certain circumstances, you might find that you can access a government grant or concession that may reduce the amount you need to borrow. For example, first home buyers in the ACT and NSW may be eligible to apply for first-time owner grants.
Additionally, it’s worth calculating your borrowing power using an online calculator. This will indicate how much you could potentially borrow, based on your and any other borrowers’, current financial situation.
Search for prospective lenders
Each and every situation is different so it’s a personal decision whether or not to go directly to one of the banks or through a mortgage broker. Some borrowers approach a bank themselves however, you might find that using a broker means you have more options and better deals.
While doing this, think about what type of mortgage you’re after. Would you prefer to pay interest only or principal too? Would a fixed or variable rate be better for your household, and are there any specific features you’d like with your loan?
Prepare all of your documents
Regardless of who you end up borrowing through, you’ll need to prove your earning power. Some of the documents you might need include:
- Proof of ID, such as your passport or driver’s license
- Proof of your income, including pay slips from your employer or a tax return if you’re self-employed
- Details of expenses, such as utility bills
- Loan statements and other such liabilities
- Official documentation featuring contracts and any solicitor involvement.
You may find that you need to ask a professional to certify some of these documents, so be sure to check in advance of making your mortgage application.
Considerations during the mortgage application process
After determining what you can borrow, which lender, and the documents you need, you can begin filling out your application. During the process, though, you’ll need to consider other expenses along the way. Considerations such as stamp duty, mortgage insurance, settlement fees, and legal fees will all require your attention so be informed and prepared for these costs.
At Achieve Homes, we feel passionate about helping real people get the homes they love. If you’d like to set your property dreams into action, contact us today.