Gone are the days of asking a bank or a mortgage broker for their cheapest home loan rate. Now, the first question you will need to ask is ‘who will approve me for a home loan?’ Banks have recently cracked down on lending, especially for investors, so it is important you make sure that it’s as easy as possible to secure a loan.

In this article, I’m going to be sharing five top tips you need to know in order to secure the right home loan for you, plus a few caveats to avoid as well.

An Overabundance of Credit

If you are applying for a loan from a bank and you have a few credit cards, this could reduce how much you can borrow and play a factor in the approval of your loan. Every thousand dollars of limit on a credit card could reduce how much you can borrow on your home loan by up to $5,000. Imagine that you have two credit cards with limits of $10,000 each – this may reduce how much you can borrow by up to $100,000 depending on the lender. The first thing you should do is to reduce your credit cards, get rid of one of them and reduce the limit on the other. Your credibility with banks will improve, and you will reduce the fees you are paying as well.

Multiple Applications

Be careful while shopping around for a home loan. Applying for multiple loans could appear on your credit file, affecting your credit score and reducing your chances of getting a loan. Engaging the services of a responsible mortgage broker will allow you to shop around for the best deal before applying, increasing the likelihood of securing your loan.

Bad Credit Score

To improve the chances of securing your home loan, it is wise to obtain a copy of your credit report to see if there are any bad marks against your profile. There may be unpaid bills or late payment fees, even if they are in error. You can obtain your credit score from free online providers, Get Credit Score and Credit Simple, allowing you to address any potential issues before approaching a bank or lender.

Personal and Unsecured Loans

In the eyes of a bank, personal and unsecured loans ring alarm bells because they are not attached to any assets. This can give banks the impression that you are living beyond your means and require credit to get by. Make sure that any personal or unsecured loans have been paid prior to applying for a home loan.

Moving from Job to Job

A key element in securing a home loan is financial security, and banks are looking for a steady stream of income over at least a 12-month period. If you have changed jobs within that timeframe, then the best thing you can do is wait until you have moved passed the 12-month threshold. If you are thinking about making the change soon, and know you want to secure a home loan, hold the change off if it is possible for you to do so.

Making the move into the property market allows you to set yourself up with an investment that will provide you with returns long into your retirement. Making yourself the best candidate to receive a home loan for this investment is something that you should put time and thought into in order to maximize the chances of securing your loan.