You shop around for the best deals on everyday products and services, and don’t for a second think home loans are any different. One of the best ways to be sure you’re getting the best home loan rates, in flexible terms, low fees, and low interest rates, is to consider what you bring to the lenders table.
Here are some ways you can position yourself as a desirable borrower.
1. Create a positive repayment history
Your credit history helps lenders figure out the quality of borrower you are. Credit monitoring organisations keep records of your debts and repayments, including credit cards, utilities, loans, and so on.
Your credit rating is assigned based on how risky your lender determines it is to lend to you. This rating will help them determine your home loan options and interest rates.
If you are given a poor credit rating, you’ll likely end up paying more interest on a comparable loan than a borrower given a good credit rating would.
Those with perfect credit history will be offered the best loan terms, but that’s not to say you’ll miss out if your credit is less than perfect. By consolidating any outstanding debt and creating a history of paying bills on time, in addition to fixing any errors, you can greatly improve your score and get the best rates possible.
2. Don’t apply for too many loans
You may think that applying for multiple loans to find and decide on the best option is a good idea, but the reality is that applying to too many home loans in a short period of time hurts your credibility in the eyes of a lender. In your credit file they can see that you’ve applied for many loans, but they won’t be able to see why the applications didn’t progress to an approval. For all they know it means you were denied the applications, which will not work to your benefit.
3. Save up a good deposit
The more significant your deposit, the more you increase your borrowing power, as it indicates less risk to the lender. In this way you’ve lowered your Loan to Value Ratio (LVR), which shows your commitment to saving and will help you qualify for special features and interest rates with your loan.
If you need to borrow more than 80% of what the properties value is, and can’t show genuine savings, you are very unlikely to be given a discounted rate.
4. Choose the right property
You’ll be able to negotiate a better home loan deal based on the value of the property you choose. Location and condition are important considerations in addition to price. Lenders consider what they would be able to get for it should they have to sell and recover the debt, so choosing the right property will give you much more leverage.
It’s not only the property itself that can hold or negate value, but location as well. Blacklisted suburbs are considered high risk and lenders are more reluctant to give good lending terms.
Working with a Peasy mortgage broker helps you get the best value home loan. Peasy professional brokers can get you the information and insider advice you need, as well as having developed relationships with a multitude of lenders
Get in touch to see how we can help you!