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Banks love you. You don’t know it yet, but they do. Why? Because providing you with a property loan is one of the easiest deals to do. You probably don’t have very complex financial structures and entities and your constant salary can be counted on to repay their loan. That said, everyone has some fears about whether they will be approved to buy a property. Lets give you some grounding now so that you can rest easy:
1. You need a deposit, at least 5% of the purchase price and ideally more. You can save it, win it, sell everything to get it or have mum and dad use their property to help you out.
2. Your borrowing limit is probably somewhere between 4 and 5 times your income. So, if you earn $100,000 then its probably around $500,000. But, its impacted by credit card limits and other loans for cars and furniture. Get rid of as many of those as you can before you apply for a loan. Lower your limits or cancel cards where possible. Learn how to pay down your credit cards quickly here.
3. You don’t have to buy your own home first. You can buy a smaller investment property with a smaller deposit and continue renting or living off your family.
4. Forget all the bells and whistles on loans. Offsets and redraw and lines of credit etc. etc. cost you money in fees and higher rates, they are designed that way. Just remember that you can still fly on a plane with a low-cost airline and get there for a cheaper price, you don’t have to pay for an exit row or other extras, it’s still the same flight. Get a basic cheap loan and then make extra payments to reduce your mortgage quicker while interest rates are low. See how much difference a few payments can make here.
5. Get pre-approved for your loan. Don’t be stressed by signing a contract and then hoping you get the money. Apply for a pre-approval that lasts for 3 months. After that time, you can update it with a couple of payslips. You can negotiate knowing that you already have the money sorted.
If you want to talk about your own situation, get some ideas on repayments or make an application for a pre-approval, just click here.