Buying your first or even upgrading to your second home is an exciting milestone, but before you start scrolling through property listings and dreaming about paint colours, there’s some groundwork to lay. One of the most important steps in the home buying journey is preparing your finances and putting yourself in the best position possible for home loan approval.
Lenders look at more than just your income when assessing your application and want to ensure you’re financially responsible and capable of managing a mortgage.
Here are some smart, practical tips to help get your finances home loan ready.
Stay on top of repayments
If there’s one thing lenders love to see, it’s consistency. Making regular, on-time payments on things like an existing mortgage, rent, credit cards, personal loans, utilities, or buy-now-pay-later services helps show that you’re reliable with money.
If you’ve had the occasional late payment in the past, now’s the time to set reminders, automate payments where possible, and get back on track. A history of missed or late payments can work against you, even if they’re small, so proving that you’re financially dependable can make a big difference.
Keep your debt manageable
While having some debt doesn’t automatically disqualify you from getting a home loan, too much of it can affect how much you’re able to borrow, or whether you’re likely to be approved.
Try to reduce your existing debts before applying for a home loan. This includes personal loans, car loans and credit card balances. The less you owe, the more confident lenders will be in your ability to afford regular mortgage repayments.
Paying off smaller debts can also give your savings a boost by freeing up money each month that you can put towards your deposit.
Keep your credit card balances and limit low
It’s not just about whether you pay your credit card off each month, lenders also look at how much of your credit limit you’re using and the size of the limit itself. Even if your balance is at zero, lenders often calculate your potential repayments as if the full limit was being used.
For example, if you have a $15,000 credit limit, they’ll factor in the possibility that you could borrow and owe that entire amount, which can reduce your borrowing power.
To put yourself in the best position, try to:
- Use only a small portion of your credit limit to show you’re in control of your spending.
- Consider lowering your limit to what you actually need. A smaller limit means less “potential debt” for lenders to account for, which can improve your borrowing capacity.
If you have multiple cards, consolidating them or cancelling unused ones can also help present a cleaner financial picture and potentially boost the amount you’re able to borrow.
Learn more about our Low Rate Visa Credit Card with 0% p.a. balance transfer for 12 months.*
Hold off on big purchases
While it can be tempting to splurge on a new car or holiday, big purchases can set back your home ownership goals in two ways: they can reduce the amount you’re able to save for your deposit, and they may increase your ongoing expenses.
When you’re preparing for a home loan, it’s a good idea to keep your spending steady and avoid new financial commitments that could eat into your savings. The more you can grow your deposit, the stronger your application will look, and the less you’ll need to borrow.
Maintain job stability where possible
Lenders want to see that you have a steady, reliable income to cover your future mortgage repayments. If you’ve recently changed jobs or your income is unpredictable, it can make your application look a little riskier.
Generally, the longer you’ve been in a role, the better it looks to lenders. Of course, life doesn’t always wait for the perfect timing, but where you do have control, maintaining job stability can help strengthen your application.
Limit new credit applications
Every time you apply for credit, whether it’s a new credit card, car loan, or even interest-free finance on a purchase, it leaves a mark on your credit report. Too many applications in a short period can make lenders worry that you’re in financial difficulty or relying heavily on credit to get by.
Before applying for a home loan, avoid taking out new credit unless absolutely necessary to help protect your credit score and present a cleaner financial picture to your lender.
Consider keeping a well-managed credit card open
While having lots of credit cards can be a negative, keeping a single, well-managed card open can work in your favour. If you’ve used the card responsibly over time, making regular payments, keeping your balance low, and not missing due dates, it can help demonstrate a positive credit history.
This can be especially useful for younger buyers who might not have had much experience with credit yet.
Getting home loan ready isn’t just about saving a deposit, it’s about showing lenders that you’re financially stable, responsible, and ready to take on the commitment of a mortgage. The good news is many of the steps you can take are simple habits you can start right away.
Whether you’re buying your first home or upgrading to your next, these smart moves can help boost your chances of getting approved, and set you up for success as a homeowner.
And if you’re ever unsure about where you stand or what to do next, it’s worth having a chat with an Auswide Bank lending consultant. They can help you understand your borrowing power, find the right home loan for you, and guide you through the process step by step.
This is not an offer to lend - approval is subject to credit assessment criteria. Terms, conditions, fees & charges apply - full details on application. Prior to entering into a credit contract with us you should read our Credit Guide. This information provides general advice only. We do not provide advice about this product based on any consideration of your personal objectives, needs or circumstances. * The Balance Transfer offer can be withdrawn at anytime without notice. Balance transfers from other Auswide Bank credit cards or loans may not be accepted. Upon expiry of a Balance Transfer offer, any unpaid balance of the Balance Transfer reverts backs to the Purchase Rate.
