How to improve your finances and home loan chances

Nailing your home loan application depends on four factors — your income, expenditure, assets, and debts. But lenders also want to see evidence of a savings and (good) credit history. Here’s what you can do to improve these.

How to improve your finances and home loan chances

1. Start saving. Make a plan.

The BT Australian Financial Health Index found that a third of us pretty much live week to week, payday to payday.

It also found that 35% have a sound savings plan, with the remaining third falling into the ‘Could Do Better’ category. To have a good chance of getting a loan, you’ll want to be in the 35% who’ve sorted their savings.

But even if you get a substantial deposit together, lenders will still want proof you’re a regular saver.

Why? Because a sound savings record gives them confidence you’ll meet your home loan repayments on time.

If you’re savings have been a bit up and down, the good news is that banks look favourably on a record that might be just six months hard saving. So set up a designated ‘House’ account and get started today.

2. Sort out a budget

Having a budget—and sticking to it faithfully—is further proof to a lender that you’re financially responsible. A good ‘risk’.

Let’s look briefly at three basic principles to start with.

Your budget should be realistic

It can’t be too harsh or you won’t stick to it. You need to take into account all your spending—all those little treats (as well as the necessities) that are easily forgotten.

Car repairs and maintenance, for instance, can be overlooked if you’ve had a good run over the past year or two.

Your budget should be ‘disciplined’

Just because it’s not the Budget from Hell, doesn’t mean you can enter ‘Shoes. $500 a month’ into your ‘Regular Expenses’ section.

You’re working towards a long-term goal and that requires discipline and some sacrifice.

Your budget should be flexible

This doesn’t contradict the previous point. But you need a bit of wriggle room in your budget for when things don’t go to plan.

If you have a setback, you can’t afford to let everything slide. It’s a great idea to keep tabs on spending.

3. Reduce your debts

Obviously, if you’ve got a hefty overdraft and loads of credit card debt, you’re not in a good spot.

To up your chances, you need to get your debt down. This might mean considering a debt consolidation loan so you only have one repayment to make each month.

Balance transfers, if used wisely, can also help reduce the amount of interest you’re paying.

Keep in mind that banks also take into account the credit limits on your cards, even if you’re not in debt at all. They’re interested in your total potential ‘risk’ exposure. So you might want to reduce your credit limits, or cut the number of cards you have.

Contact us on 03 9553 0271 to find out more.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at hhttps://www.nab.com.au/personal/life-moments/manage-money/budget-saving/improve-finances

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

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CFP® Dip FP
Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.