Are you hoping to buy a home but are apprehensive about the process of securing a home loan? It can be confusing as there are many lending institutions in the market, as well as mortgage brokers and others for whom home loan products are a key part of their business. The criteria they use to assess your application can vary from one lender to another, but they also have a basic set of eligibility conditions that are the same for all. A good place to start is to check if you satisfy these basic requirements.
Age Eligibility and Residency Status
The minimum age for eligibility for a home loan in Australia is 18 years. There is no maximum age as long as the borrower can demonstrate the ability to repay the mortgage without incurring financial hardship in accordance with the principles of responsible lending. The applicant must also be an Australian citizen or permanent resident, or married to, or in a de facto relationship with an Australian citizen or permanent resident.
Checking Your Employment Information
All lenders will assess your ability to repay the loan by asking for employment information. For PAYG employees, the three most recent pay slips and current tax returns will be required. They may also look at your employment history to establish if you have a reasonable level of employment stability. Generally, a lender will look more favourably on an application from someone in full-time employment rather than part-time or casual work.
Can You Afford to Repay the Loan?
They will also assess your monthly expenses to ascertain your ability to repay the loan, including any other existing debts such as credit cards or personal loans. They are looking to see if your living expenses are higher than average, and how much disposable expenditure you have left after servicing these expenses and debts.
Our sales professionals at Bunbury Real Estate are experienced at finding the perfect properties for their clients, but they are also often asked questions about the process of getting home loans. They advise clients to seek this information from experts in lending, as the knowledge they have about home loans is only general and may not be appropriate.
A Good Deposit and Some Extra Savings is a Plus
Most home lenders will lend up to 80% of the value of the property, leaving a cash deposit of 20% to be paid by the loan applicant. However, some lenders may consider the application of someone who has less than 20% if they are willing to pay for the Lenders Mortgage Insurance (LMI). Additional savings in their bank account will also assist loan applicants to cover additional costs such as conveyancing fees and land transfer (stamp) duty which is applicable in Perth.