The Top Australian Mortgage Myths Busted

For first home buyers, the process of getting a home loan can often be mystifying. Furthermore, the amount of incorrect information that can be read on the internet, discussed between friends and colleagues over brunch, or delivered from parents is astounding.

Yes, getting a mortgage can be difficult, but thousands of people do it every day, and with the help of the right professionals, such as an expert Easy2Mortgage brokers, you can take a step closer to your dream of owning your own home, too.

Over the years, I have helped numerous of Australians through the process of getting approval and settling their first home loan application. These are some of the myths and misconceptions, I hear most often when consulting with my clients;

Shopping around for the best deal can ruin your credit score.

Myth! Whilst the Credit scoring companies, such as Equifax (previously Veda) understand that as a consumer you would like to shop around for the best possible deal on your home loan. It’s equally important to know, having multiple enquiries on your account can lead to a lower score and be seen as less desirable for lenders.

Getting the suitable rate on your home loan is absolutely vital, as this will impact the total interest you pay and the monthly repayments that you’ll commit to. Ultimately, it can have a huge impact on the family’s monthly budget, so make sure you get help of a professional Mortgage Broker and take advantage of their pool of lenders.

Is Pre-approval the same as pre-qualification?

Myth! Pre-qualification and pre-approval are very different, even though they sound similar. Getting pre-qualified for any kind of loan is a very quick process and usually happens instantly after answering a few questions online to profile you as a consumer to see how your answers fit within the lender's ideal borrowers’ profile.

These questions are usually surrounding your current financial situation, income and any other loans or debts you might be carrying. If your answers fit within a certain range, then pre-qualification is often automatic.

This being said, just because you have pre-qualification doesn’t mean you will be pre-approved which is a much more in-depth process.

A pre-approval is lender’s commitment to borrower, providing all of the conditions outlined in the pre-approval are met. This means, as a borrower you will need to provide evidence to your answers in a pre-qualification and actually go through a more formal application process.

In the past, I have had clients seeking my assistance due to; have been pre-approved but rejected at the application stage. In most cases, it wasn't a problem, as I was able to successfully get them approved by a different lender, or with additional documentation.

Is your perfect credit score enough to get you approved for a home loan?

Whilst a good credit score definitely goes a long way in getting you approved for a home loan, there are a lot of other factors at play for both lenders and borrowers alike.

Lenders take into account many factors when considering approval. This includes income Vs total debt and your abilities to service possible facilities such as; other mortgages, personal loans, car loans, credit cards… and more.

More importantly, there are many ways to gain approval even with a less than desirable credit score, such as seeking out a loan guarantor or providing an additional deposit amount to offset some of the risks to the lender. Regardless of your situation, if you are at all concerned about how your credit score will affect your application you should absolutely speak to our consultants at Easy2Mortgage to devise a strategy to deal with this potentially impactful factor in your application process.

Should you get rid of your other debts and loans to get approved?

This can certainly help you on your way to obtain an approval but, it’s not a hard and fast rule. Most lenders understand the fact that borrowers could have some kind of debt. It is rather the amount of debt and your ability to service including the proposed home loan that lenders will really be considering.

In actual fact, having existing debts that shows a good credit track record and your strong will in management of those liabilities can often be a good point towards securing an approval form a lender. Such a credit history will speak to your consistency and reliability to pay when it comes to servicing your obligations.

Whilst many young Australian dreams of owning a home can be daunting, getting help and guidance of an expert mortgage broker can restore peace in their minds by methodical approach to obtain an approval. If you have any questions or would like to discuss your current plans, please feel free to reach out.