5 tips to show us you’d be a great borrower

If you’re looking to get your home loan application across the line, there are certain things you can do to show a lender you’d be a great borrower.

Every borrower’s circumstances are different and there's no guarantees but getting prepared with these tips may help with your application process.

1. Rock your creditworthiness

If you’ve ever had a credit card or applied for a personal or car loan, you’ve got a credit score.

A credit score is a number that gives lenders an indication of your financial condition. Generally, a higher score means higher creditworthiness.

Ways to get a higher score include paying off credit cards, loans and bills on time and not taking on a greater loan amount than you can reasonably manage.

Before applying for a loan, it’s a good idea to check your credit score for any unpaid balances, inaccuracies, or signs of theft or fraud. You may be able to improve your credit score which will support your loan application. 

2. Steady cashflow, steady wins

Lenders will want to know that you have money coming into your bank account to pay off your home loan. A great way to show this is by having a stable income – such as having permanent employment.

Generally, lenders favour a solid, stable employment history over casual or contracted work. It’s all about ‘serviceability’, they like to see evidence that you have the ability to make regular repayments.

3. Stack up the cash

The deposit you put down for your home loan gives your lender security. The lender may view you as a safer bet if you’ve had the discipline to save a larger amount towards your home.

If you have saved a deposit of 20 per cent or more, you can also avoid Lenders Mortgage Insurance, which is a charge that protects the lender if you default on your loan.

There are also a few programs like MyHome and the Home Guarantee Scheme that are available to help get people into homes with less than 20 per cent deposit. The same creditworthiness rules apply but it might mean you can own your own home sooner.

4. Prove you’re a stealthy, savvy saver

Along with having a bigger deposit, being able to show your prospective lender that you have solid money moves like a good saving history can go a long way. Again, it shows discipline and good financial practices to lenders, which can help your application.

There are several ways to achieve this, including making regular direct debits to a separate account and putting tax refunds or other windfalls into savings as soon as they come in.

5. Be a debt dragon slayer

The final way to show you’d be a good borrower is by keeping debt to a minimum – and paying it off quickly when it accrues.  

Essentially, this is what your home loan lender is hoping you’ll do if they take you on as a customer. Being able to prove that you have paid off your debt completely may help to show you’re the sort of borrower they’d like to have on the books.

Review any credit cards and buy now pay later accounts. Are they necessary? If not, you might consider closing them. Be debt lean!

Remember, the more you can assure lenders you are financially fit, the better your chances of owning your own home sooner. So, go ahead, take charge of your finances, and become the ideal borrower.

Please note this information is general in nature and does not take into account your personal circumstances or objectives. You should consider this before acting on any of the information contained. Bank of us lending criteria, terms and conditions, including fees and charges apply. Full details are available on application.