Will buying a house improve your chances of getting approved for a home loan than buying an apartment or a brand-new house and loan package?
Residential home loans can be used to purchase houses, townhouses, apartments, duplexes, investment properties, vacant land and the construction of a home. So the good news is that your choice of property is not the main influencer of the Lender’s decision.
Lenders take into account a number of factors when deciding whether to approve or reject a home loan application.
In Australia, Lenders follow strict legislative requirements to reduce the risk for both themselves and the borrower. They can only lend as much as they reasonably expect the borrower can afford to repay. They also cannot lend you more than the value of the home because if the loan goes bad they need to be able to get their money back.
That’s why, a number of factors are taken into account before making a decision, not just the particular property you are buying. These could include:
- The value of the property being purchased. This determines how large a security the bank will have against the loan they are providing you the more valuable the property and the higher the likely resale value, the more willing a lender will be to give you a loan.
- The size of your deposit, savings history and debts. Being able to show a steady income stream and savings will demonstrate your capability to meet mortgage repayments and other debts like credit card payments, could make you more likely to be approved for a loan.
- The location of the property being purchased. Whether an independent house or an apartment, its proximity to amenities and transport could add to their resale value. This could mean less of a security risk for lenders who will be prepared to approve a loan.
- Using a property for investment or residential purposes. Investment properties provide a steady stream of rental income and are often purchased in high-growth areas for maximum returns. Both of these factors make them more attractive to mortgage lenders, as they create a more secure investment.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage.
