9 Key Steps in Home Loans Application

9 Key Steps in Home Loans Application


  • Step 1: Save up for deposit
    • Aim to save at least 20% for deposit. Otherwise, there are options if you don’t/can’t save for a deposit or at very minimum 5% saved “genuinely”.
    • Avoid paying the lenders mortgage insurance (LMI) by paying more than 20% or more on deposit.
    • Use an appropriate calculator (budgeting/repayment).
  • Step 2: Questions to answer
    • This will be important in the succeeding steps.
    • How long are you planning to live in this area/location?
    • Who will be living there-are you planning a family-or reducing size of current family, kids leaving soon
    • Have you researched facilities/amenities/services in this location?
    • Will you need to let out to take a job elsewhere someday?
  • Step 3: Know your budget
    • You need to manage your expectations relative to your budget.
    • Have you used our Intellichoice budget calculator?
    • What is your income likely to look like in the future?
    • Will someone else be contributing?
  • Step 4: When comparing lenders, consider these:
    • Ask from at least two or more lenders as a comparison.
    • Who authentically aligns with your beliefs/values?
    • What track record does the lender possess?
    • Would you feel proud to be associated with this lender?
  • Step 5: Choosing the best deals/rates
    • Fixed vs. variable rate
    • Remember, getting a mortgage is a long-term commitment. Be ready.
    • Who is explaining the products & features to you-the bank who has a vested interest in making a sale-or a broker who is searching for a suitable product?
    • What is the actual three-year cost versus the “here and now cost”?.
  • Step 6: Consider the costs
    • The cost of getting a mortgage does not end with the interest rates.
    • Generally, you still have to pay for stamp duty, legal fees, processing fees, etc.
    • Some lenders waive these fees, so you need to take this into account when choosing the lender
    • What are upfront costs?
    • What are ongoing fees?
    • What are exit fees?
    • Is there any way to avoid paying for these fees?
  • Step 7: Only borrow what you actually need
    • You need to also take note all the other expenses associated with your new home.
    • It can be easy to borrow more to help furnish the home-but should you really be doing that?
    • Can you hold off on doing the renovation until 6-12 months after moving in?
  • Step 8: Make repayments
    • Make sure you make the repayments religiously.
    • Generally, it will be advantageous on your part to pay fortnightly as opposed to monthly due to interest savings.
    • Have you considered insurances in case something unforeseen happens?
    • Are there “buffers” in savings to protect against another Covid-like event?
  • Step 9: Dangers and when to ask for help
    • Real estate is a major investment and the number of homeowners in Australia who are on the brink of default has surpassed the 1-million mark with 28,000 are in serious debt trouble.
    • Always get in touch with your broker/lender if you experience any mortgage-related issues.
    • If you’re struggling with the repayments, it’s best to address it sooner than later as lenders tend to be less forgiving if the account is badly in arrears before you call.
    • Contact us as soon as you perceive a potential problem so we can offer some guidance.
    • Is there another way of purchasing a home if deposits are not readily available.