While many clients ask us to help them secure a loan for upgrading their home, only a few make it to the other side of receiving formal approval and picking up the keys to their dream home. What makes these home buyers successful? For the others, where did it go wrong in the process?
In this post, we will outline the the 5 things every client wishes they knew about arranging a loan for their NEXT home. We have previously shared the steps to the end-to-end home buying and loan approval process, as we call it the “Finance Made Easy” process. But here, for help clients get their next home, we wanted to take our own advice to the next level, by going through what ‘kills’ deals versus what helps them succeed.
To ensure that your loan gets approved, here are the five factors you need to know.
1. Providing High Quality and Up to Date Supporting documents
Your supporting documents are the key to unlocking your home loan approval. Your bank and broker can’t read your mind about your income and your financial position – at least not yet anyway! And due to privacy restrictions, there is some information that only you have access to and only you can share. This information includes your identification, pay slips, tax returns and financial statements, home loan statements, savings statements, rental statements and other information about yourself and your property.
All your documents must be of high quality and up to date at the time of application to ensure your loan is approved.
2. Getting Familiar with Technology Signing Tools
Broking has moved on from the dark ages of faxing and posting your documents around. Even emails and ink signatures are becoming a thing of the past!
To make sure all your information is efficiently and securely collected, a broker in this day and age should be sending you a secure online portal to upload your supporting documents and collecting your personal information through an online fact find or other digital means.
You should also learn to use e-signing tools like DocuSign so you can move quickly through the loan approval process.
3. Keeping Thorough Notes About Your Scenario
Often loans fall over because clients leave off an important detail about their personal or financial lives, which they don’t think is important. Subsequently, this detail becomes a sensitive issue or even worse, a dealbreaker for a lender.
This could be things like a late home loan or credit card payment, a silent company directorship, abnormal income and spending patterns, or past loan defaults.
As your broker, we write detailed notes that explain your story in the best possible light. Remember that we are on your side so we ask that you be upfront and honest about anything peculiar about your scenario so that we can decide how to explain your situation so you can get the loan.
4. Being Responsive To Information Requests
We’ve said it before and we’ll say it again – TIME KILLS DEALS.
We find clients who successfully buy their next home are quick to respond to requests for information, but more importantly, make a prompt decision once presented with a recommendation and the data to decide.
This is super important once your loan has been submitted and picked up by the credit officer. When a question is asked by a credit officer, you really want to strike while the iron is hot, by responding to them quickly and ideally catching them in a good mood.
5. Having a Conservative Bias
Having a conservative bias means not over stretching yourself and thinking of “what if” scenarios and hence protecting any downside risks.
Our clients, who are committed to buying a new home, de-risk themselves by doing all the hard work up front by securing a pre-approval. This allows them to have clear goals and know their speed limits.
They give themselves safety buffers, not just of money, but of time. They negotiate where possible with longer cooling off and settlement dates so they can work through any settlement issues if they arise.
This is critical when stakes are higher, such as when buying luxury property or taking out more complex finance like a bridging loan.
Also, when arranging a pre-approval, it’s often easier to ask for ‘more’ and then work downwards from there on price.
So that’s it! I hope you found those tips on securing a loan for your next home useful
Speak to a Broker
If you have any questions or comments on this topic, you are more than welcome to get in touch with me () or anyone in our broking team.
For more tips on getting your next home, please stay tuned or head to our Youtube channel – “The Next Home Series“