Quick quiz - when should you get your finances in order if you want to buy a home?
When you’ve won the lotto
When you’ve maxed out every credit card
When you’ve signed a contract to buy a house
The sooner, the better.
It might not be the most exciting answer, but ‘d’ is the way to go if you want to be ready when you find the home you want to buy.
Hopefully by this point, you’ve chatted with a loan consultant over the phone, and given them an idea of what shape your finances are in. Now you’ve got a loan interview, it’s time to go over the details and provide evidence of the information you’ve shared.
Know how much you earn (and prove it)
Your lender will need to know exactly how much you earn each year, because how much you can borrow depends on it. That means you’ll need to bring in payslips, Centrelink statements, tax returns – whatever it takes to prove your income. Talk to your lender about exactly what they require, and what really counts as income. There’s no point in getting your hopes up about how much you can borrow if your income can’t be verified.
Know how much you owe (and be honest about it)
It can be surprising when you add up all the things you owe money on – and sometimes a bit scary. When you go to a loan interview, you will need to be upfront about all current credit commitments. This includes (but isn’t limited to) credit cards, store cards, rent-to-buy, car loans, personal loans, financial supplement loans and Centrelink debts and fines. It might be tempting to conveniently forget a few outstanding items, but you will be credit checked so be upfront from the start.
Know how much you need (and how you’re going to pay it)
When you spoke to a loan consultant, they would have given you an indication of how much you’ll need to pay in deposit, fees and charges.
To take the next step at loan interview, you need to show you have this money by providing a bank statement or proof that someone is going to gift you the required amount (usually in the form of a declaration). If you’ve already paid the deposit, you’ll need a receipt from the real estate agent, property sale contract or a statement from your conveyancer.
There’s plenty of paperwork on the road to home ownership, but the plus side is once you’ve bought a place, you’ll have somewhere to keep it all!