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2022-04-28 10:05 am
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Shaping up your finances before buying

Lee Dastey
February 17, 2022
August 5, 2021

You’ve made the decision to buy a property, and have started looking for your new home, but how do you know how much you can borrow? Here are some answers to common questions our lenders hear from customers when they’re preparing to apply for a loan either for the first time, or for the first time in a while.

How is approval assessed?

When we assess you for a loan we look at how much you can afford to repay taking into consideration your current expenses, your existing assets and liabilities, and your history of repaying other loans and debts. Your occupation and a history of stable employment are also taken into account.

What is my credit rating?

Information about your loan repayment history stays on your credit file for at least five years, so it’s important to ensure your credit file is up to date before you apply for a home loan. You can get a copy of your credit rating from a credit reporting agency.

Also check that your credit file is accurate. Sometimes records are not updated and you're entitled to correct them.

Repair your record by paying any outstanding debts. If you think your credit rating could be better, be honest and raise the issue. It shows you are responsible and are resolving the problem. If your credit rating is very poor, consider delaying your application and focusing on repairing your credit file and saving for your deposit.

Should I get pre-approval?

It’s wise to know exactly how much money you're able to borrow you before you make an offer on a home. Obtaining pre-approval, also called approval in-principle, will give you some peace of mind and shows real estate agents that you are a serious buyer. It also allows you to move quickly when you find your dream home.

To obtain pre-approval you need to submit your loan documentation, which will be assessed against our loan criteria. If approved, we'll send you a ‘letter of offer’ or ‘pre-approval certificate’ indicating the maximum loan amount we will lend you.

Our pre-approvals are usually valid for around three months.

What do I need for an application?

When applying for a loan you'll need to have the following documents handy:

  • proof of salary – recent pay slips, or your last two tax returns if you're self-employed
  • proof of other income – e.g. share dividends
  • proof of any assets – e.g. investments, shares or car
  • a fair estimate of your monthly living expenses
  • honest details of other debts – e.g. loans, car lease, credit cards and store finance.

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