4 things you need to know before applying for a home loan

You need to be able to afford the repayments, and then some

When you apply for a home loan the bank will not only check if you can afford the repayments and interest rates set today, but if interest rates go up tomorrow or in ten years. Take this into consideration with getting prepped for your application.

 

Your HECS-HELP debt can affect your borrowing capacity

Your compulsory HECS repayments are factored into the calculations banks make when they evaluate your ability to repay a loan, so if you have a HECS-HELP debt, this may reduce how much you’re allowed to borrow.

You will need to limit your living expenses

There is now a growing trend towards banks asking for a detailed budget of your current living expenses to determine if you are truly capable of repaying your home loan without experiencing financial stress. If they think you’re supplying a number that is too low, they’ll use their own figures gathered from data on the average Australian household living costs.

 

You’ll need to prove yourself

When it comes to submitting all the paperwork for your home loan the bank or lender will ask you for proof of your living expenses and income. Don’t be surprised if they ask for recent payslips or a tax return if you’re self-employed. Identity documents such as a Medicare card, drivers licence or passport and copies of your current credit card and loan statements can be requested if you have them. The lender may also ask for proof of outgoing expenses or rates notice.

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