1. KNOW YOUR SPENDING NON-NEGOTIABLES
These are the things you absolutely must spend money on each week. Everyone has different non-negotiables, but all areas should be up for scrutiny when you’re saving for a deposit.
This doesn’t mean spending $300 a week eating out. It means what is essential and what is a nice to have. Can you go to a cheaper gym/work out at home using an app? Don’t go clothes shopping and get off all mailing lists. Delete all buy-now-pay-later schemes.
2. ACCOUNT CONDUCT
The bank has no idea how you’re going to handle making your mortgage repayments – especially if you haven’t banked with them before. All they can really go by is what they see going on in those accounts, Account conduct is one thing people don’t really focus on enough, and it’s the simplest thing to fix.
The main thing to watch out for is going into overdraft when you don’t have one arranged on your account. Banks take that as a sign that you’re living beyond your means, and you’re not on top of your spending.
3. KEEP TRACK
Know exactly what you are spending your money on. Keep track using apps, spreadsheets, or even writing it down. It’s amazing how much you can save if you are accountable – even to yourself, but telling someone your goal will fast track your ability to achieve it.
4. DITCH THE CREDIT CARD
A $10,000 credit card, with a balance at zero, will basically be seen as an actual expense. The bank will regard that as a $10,000 debt that you have, which can impact how much you can borrow.
Paying your credit card debt right down, lowering the amount you can access to a bare minimum, and keeping it there for the duration of the application process.
We want the balance to be at zero because if the bank comes back and says, ‘Hey, look, this credit card is potentially impacting how much they can borrow’. We can just say, ‘well, we'll get rid of it’.
5. PROVIDE THE EVIDENCE
It’s much easier to get an approval if you are an employee rather than self-employed. If you are self-employed, you are required to provide the last two years’ financial statements – for some people, that might be difficult.
If you are considering leaving your fixed employment and becoming self-employed, it will be harder to get an approval.
That doesn’t mean it’s impossible, it just means there are more hoops to jump through. So, delay that if you can, but bearing in mind a pre-approval is only short term, so you’d need to remain in employment until after the property settles.
6. THREE-MONTH CLEAN UP – DON’T DELAY
You want to present three months of the best version of your bank account possible. A mortgage broker will go through everything thoroughly and look for things that are red flags for banks.
If it’s pretty bad, then you actually have to wait another three months to have a cleaner looking account. But waiting another three months could mean that interest rates will go up further, or banking criteria is going to get tougher.