We all know how important it is to shop around to get the best deal on any product or service, and home loans are no exception. However, to be sure you’re getting the best combination of flexible terms, low fees and interest rates, you need to look at what you can offer the lender.
Here are five smart ways to present yourself as a desirable borrower.
1. Build a good repayment history
A lender will look at your credit history to help work out what kind of borrower you are. They access this information from credit monitoring organisations, who gather records of how and when you pay your debts. Your use of credit cards, personal loans, mobile phone and utility bills are all included.
The lender assigns you a credit rating based on how risky you are. It’s this rating that helps determine how many home loan options you have access to and what interest rate you’re likely to pay.
A poor rating can see you pay more interest than a comparable loan held by a borrower with a good credit rating.
Lenders offer the best loan terms to those with squeaky clean credit, but that doesn’t mean you have to miss out if your credit isn’t up to scratch. Consolidating outstanding debts, committing to start paying your bills on time, and fixing any errors in your credit file will help improve your credit score.
2. Limit loan applications
Applying for too many home loans in a short space of time will hurt your reputation in the eyes of the lender. Through your credit file, lenders can access information that shows you’ve made multiple applications, but they can’t find out why your applications haven’t progressed to an approval.
It doesn’t matter if you’ve merely gathered responses from various institutions and are in the process of deciding which one to take. The lender sees it as other lending institutions declining your application.