When planning to buy your first home, you must demonstrate to your lender the ability to save money and continue the financial discipline that will see your loan repayments made regularly.
First-home buyers should be aware of these eight pitfalls which may undermine a lender’s confidence in the ability to make payments promptly.
Large deposits
You might think a large sum deposited would be seen favourably. That may not be so if you haven’t saved the money yourself. The lender may not be confident in your ability to save if the deposit has been gifted or loaned to you by someone.
Co-sign a loan
If you’re considering a business venture, you should avoid making big financial decisions before purchasing your first home. Of course, if you’re prioritising your need for a co-signed loan, then it’s a legitimate decision.
Change bank accounts
Moving your account will complicate the application process and attract questions.
No payday loans
Your credit rating will highlight any loans you might receive from companies like Afterpay. Avoid these types of financial arrangements until you purchase your property.
No big-ticket items
It sounds obvious, but you’d be amazed how many young buyers get caught out by purchasing a car or a big holiday just as they expect to be granted a home loan. Don’t cancel yourself out like this.
Switch jobs or quit
Lenders love consistency of income. So, even if you’re moving for a better job and more money, be aware your lender may not applaud this action. Depending on the situation, if you switch jobs you may wish to delay the lending process until you’ve been in your new role for several months.
Late payments
Whether by necessity or accident, you must be disciplined about paying your bills on time. Any non-payment or late payment will show up in your credit score.
Being credit checked
Avoid a situation where someone might run a credit check on you. Incredibly, being checked in this way can have a detrimental effect on your credit score.
NOTE: The information in this article is general in nature and provided as a market overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.