Last month we shared some essential money-saving tips to help you reach your financial goals. One of our top tips from the article and a piece of advice we give to all of our clients considering a home loan is to make a budget – where there’s a savings goal there should always be a budget!
Here’s a quick reminder on why you should budget before we delve into the role it plays when applying for a home loan:
– Budgets help you set spend limits
– Budgets help you set goals
– Budgets help you change your bad money habits
– Budgets help you get what you want in life without sacrificing your entire lifestyle
You know how essential budgets are in setting a basis for good saving habits, but do you know how essential they are when it comes to applying for and being approved for a loan? Not to mention paying back the accrued debt.
A sturdy deposit doesn’t guarantee a home loan
Almost 30% of Australians don’t set a budget and it’s impacting their chances of gaining a loan. If a finance provider can’t see proof of your ability to save, how can they be confident in loaning money to you? In the case of buying a home, a deposit just isn’t enough anymore, lenders are also reviewing your spending habits to ensure you can accommodate the loan you’re signing up for.
When you’re planning to take out a home loan, the first thing you should do is review your spending habits then set up a budget to stick to. Our advice is to give yourself an achievable budget that still allows you to have some social freedom and continue to enjoy the good things in life!
You may already have a decent amount of savings as a house deposit but if your spending is excessive and you’re regularly dipping into your savings account, or failing to pay bills on time, the home loan application process and gaining home loan pre-approval can become a bit tricky.
With good saving habits comes improved borrowing power! You should prioritise showing your lender that you not only have savings built up already but can manage your spending and stick to a budget that suits your lifestyle while allowing you to meet your projected mortgage repayments.
Ready to become a homeowner? Contact our team at SFE Loans to get expert loan advice, without the nonsense. We’ll take you through the borrowing process and get you on track to not only purchasing a property but confidently paying it off.