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In the current housing climate, unless you've won the lottery you'll likely need a home loan to buy a house.

There are various lending criteria you’ll need to meet to secure a home loan; however, having the following items down pat before you apply will make the approval process more seamless and your chances of home loan approval higher.

Alter your spending habits

If you're someone who likes to indulge in the finer things in life, you might want to start reconsidering some of your purchases while you're saving for a house. When you apply for a home loan your lender will review your last three months of bank statements to see where your money is going.

Spending beyond your means will do more than harm your bank balance but also show your lender you aren’t able to save effectively or cut down on costs – something you’ll most likely have to do when you’re paying off a home loan.

Take the time to evaluate your statements and make some changes to your spending before you apply. It will be a win/win for you – higher chance of approval plus more money in the bank which could go towards your deposit.

Be realistic

When it comes time to finding a property, be realistic with your options. While we all dream of our perfect house, this might be something ‘future-you’ can work towards. For now, stick to a price range you know you can afford.

Putting an offer on a property that you can adequately afford also means you’re likely to have saved more of its value, showing your lender that you can pay your deposit, monthly repayments and additional fees and charges.

Improve your credit score

Before your lender can grant you full approval on a home loan, they will review your credit report and in turn your credit score. Your report will provide them with information on how reliable you are when it comes to lending money and paying your bills. Whilst you can’t instantly fix your credit score, you can start making changes early so that it will improve over time. This includes paying your bills on time and paying off any debt.

Compare your options

Choosing a home loan provider is an important consideration when buying a house. When doing your research, compare all the options available by different financial institutions e.g. features such as offset accounts and ability to redraw as well as the difference in fees and interest rates.

Save, save, save

Finally, save and keep saving. Having a savings history will tell a lender more about you as a borrower than just having a big account balance.  Save enough to cover your deposit and additional fees, as well as safety net should your income stop or an unexpected cost arise.

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