Home Loans Guide.

Choosing a house to buy can sometimes feel relatively easy compared to preparing to apply for home loans.

There is a lot of information, processes and fees that you need to take into consideration so it’s important that once you have narrowed down your home loans search to a preferred lender with great interest rates, that you prepare for your next step – applying.

We will get you started down the right path by highlighting a list of things you should consider to be best prepared for the home loans application process.

Repayments

As a rule of thumb your loan repayments should be no more than 30 percent of your income.

Flexibility

When calculating how much you can afford to make in repayments, ensure that you allow for at least a 2 percent buffer for rate increases and changes to your financial circumstances.

Deposit

Make sure you have saved a deposit and can show a proven savings history of at least three to six months by either depositing money into a linked savings account on a regular basis (at least once a month) or increasing your balance in your transaction account. Most loans require a deposit of at least 5 percent and you will also need to save for establishment fees and other upfront charges.

Documentation

You will need to have copies of all documentation required, such as pay slips to prove your income, bank statements to show your savings, bills or rental receipts to prove your credit history and identification.

Fees and Charges

Do your homework so there are no expensive surprises. Be aware of all the fees, charges and ongoing costs.

Extra Costs

Have you accounted for the other costs incurred in purchasing a home, such as lenders mortgage insurance and stamp duty? Check out our fees and charges checklist and our stamp duty calculator to make sure you’re financially prepared to sign the dotted line.

Fine Print

Finally, while it’s not the most exciting part of buying a new home, reading and understanding the home loans product disclosure statement – is certainly one of the most important parts.

{Source: http://www.ratecity.com.au/home-loans/articles/home-loans-guide-step-6-of-7-application}