With low interest rates and a competitive housing market making the decision to step into the housing market more appealing than ever, many Australians are deciding to take the leap. However, there are many factors to take into consideration when deciding if now is the right time for you to purchase a property. Applying for a mortgage to invest in a new home is an exciting venture, but like many things in life, timing is everything. Deciding when to apply for a mortgage can be paramount to having a successful loan application. Below are our key areas to think about when deciding if now is the right time for you to apply for a mortgage.
When you have the right team by your side
Applying for a mortgage can be an overwhelming process, which is why you need a team of professionals to make the process simple. Rostron Mortgages will help you find the perfect mortgage for you and handle the application process – getting you into your new home sooner. So, if now is the right time for you to step into a new home, contact the Rostron Mortgages team today we can navigate the easiest way to get you to your dream.
When you have a steady income
One of the main things that a lender wants to be sure of when you’re applying for a loan is that you can pay it back. Although no one can predict the future, a steady income is a sign that you will be able to service your mortgage both in the short and long term. Ideally, working full time with the same employer for at least two years before applying for your mortgage is the best way to prove a steady income stream. As a permanent part-time employee, again, two years with the same employer is considered a steady income providing that you can show evidence of a set number of hours or days worked in a specific timeframe. As a self-employed or casual worker, you will need to show evidence of several years of steady income through payslips or tax statements due to the potential uncertainty of your income. A new career opportunity doesn’t necessarily rule you out of a successful mortgage application, either. In this circumstance, it is strongly recommended to wait at least three months before applying for a mortgage (to pass most probation periods) and you will need to supply a minimum of two of your most recent payslips to confirm your wage. A new opportunity in the same industry is also looked at more favourably than a career shift and maintaining or improving your wage is ideal. If you plan on paying your mortgage with an alternative income, such as bank interest or a pension, then you will need to provide evidence of this income and may also need to demonstrate your saving patterns for the 12 months before your mortgage application submission.
When you have a good credit score
Your credit score can determine the success of any loan application, not just a mortgage, which means considering it before applying for a mortgage is a must. If your credit score is very good to excellent, then well done! This score will positively affect your application and, in terms of your credit score, now is the right time to apply. However, if your credit score is lower than you’d like, consider the reasons why this may be the case. Although there are many reasons why a credit score could be low, such as defaulting on loans, missing credit card or bill payments or needing to file for bankruptcy, it is worthwhile considering what areas have created the low score and how you could change your spending, repaying and applying habits to increase it. Although there aren’t any quick fixes to improve your credit score, these positive changes will be shown on your credit report for lenders to see when making a decision on your application, thanks to Comprehensive Credit Reporting.
When you have savings
To apply for a mortgage, you need to have some serious savings in the bank for the purchase deposit as well as the upfront and ongoing costs. For the deposit, it is recommended that you aim to save 20% of the property’s purchase price. However, you may still be successful in your mortgage application if you can save a deposit of 5-10%. Alongside the deposit cost, other upfront costs that you will need to factor in for including application fees, mortgage insurance (for loans of 80% or more), valuation costs, solicitor and Government fees as well as building and pest inspections. These costs quickly add up and can quickly leave you thousands of dollars out of pocket. Consider if there are any Government grants, subsidies or incentives to assist you in your purchase, especially if you are purchasing your first home. Although it won’t help with the mortgage application, these initiatives can help you get into your home sooner.