Understanding The Process Of Home Loans In Australia
Obtaining home loans in Australia can be a difficult and lengthy process if you don’t know what to expect. Submitting your application and getting approved are probably two of the most important steps you believe you need to learn. However, there are many other specific factors you should have general knowledge about before you ever apply for home loans in Australia.
Before you submit an application for home loans in Australia, you should be aware of the factors that are taken into consideration when it comes to whether the lender approves you or not. There are four main factors that a lender will look at. These include serviceability, loan to value ratio, your credit history, and your financial information. Let’s take a look at what each of these entails so you have a better idea of how to look pretty to the lenders so they approve you.
Serviceability is the first factor you need to know about. This is simply put as the borrower’s, that’s you, ability to repay the loan without going through a financial hardship. There are many smaller factors that contribute to this overall main factor. Some of these smaller factors include looking at your income, other debt expenses, and your employment history, combined with your level of repayments to the bank, which can be determined through the Loans.com.au Home Loans Calculator
You should speak to providers of home loans in Australia to understand what their key criteria are for this category and how they weigh their factors.
Next up is the loan to value ratio or LVR. This is a simple percentage that is determined based on the amount of money you intend to borrow from the bank and the value of the home you’re purchasing. For example, if you’re borrowing 80,000 dollars and the value of the property is 100,000, you’re LVR is 80 percent. In most cases, lenders will give borrowers between 80 and 90 percent of the value of the home in their loan. This is to ensure that if the borrower defaults on their loan that the lender is still able to sell the home and get their money back.
You’ve heard your credit history is important for purchasing many things and a home is no different. Having a positive credit history will prove to lenders that you pay your debt payments on time and don’t borrow more debt than you can comfortably handle. If the borrower has a history of defaulting on loans and frequently is late on their credit card payments, the lender is not going to look favorably on that person. They will take the borrower’s credit history as an indication that they’re likely to default on the mortgage.
The last factor that lenders of home loans in Australia look at is your financial information. The number of financial statements you will need to supply will vary depending on the lender. Remember they’re trying to make sure your credit looks good so they know you’ll pay them back the money you borrow from them. These statements can include bank statements, savings statements, and your balance sheet.
Understanding the process of obtaining a Loans.com.au Home Loan in Australia can seem overwhelming at first. However, when you arm yourself with the knowledge about this process, you can make better financial decisions. We encourage you to read this information a few times and take notes.