Top 5 Tips for a Successful Loan Application

Applying for a home loan can feel overwhelming, but preparation makes all the difference. These five tips will significantly increase your chances of approval and help you secure the best possible deal.

Tip 1: Know Your Numbers Before You Apply

Lenders assess three key numbers: your income, your expenses, and your debts. Know these inside out before you apply. Income: Include all sources — salary, bonuses, rental income, freelance work. Lenders typically use 80% of non-base income for serviceability calculations. Expenses: Go through 3-6 months of bank statements and categorize every expense. Lenders use the higher of your declared expenses or the HEM (Household Expenditure Measure) benchmark. Reducing discretionary spending before applying can improve your borrowing power. Existing Debts: Every $10,000 of credit card limit reduces your borrowing capacity by roughly $50,000-$60,000 — even if the balance is zero. Reduce or close unused credit facilities before applying. Serviceability Buffer: Lenders test whether you can afford repayments at 3% above the current rate. Make sure your numbers work at this stress-tested level.

Tip 2: Get Your Documents in Order

Incomplete applications are a leading cause of delays and rejections. Have these ready: Identity:

• Passport and/or driver's license
• Medicare card

Income:

Last 2-3 payslips

Most recent group certificate or tax return

Employment contract (especially if recently changed jobs)

2 years of tax returns and ATO Notice of Assessment if self-employed

Assets and Liabilities:

3-6 months of bank statements for all accounts

Superannuation statement

Investment account statements

Details of any existing loans

Property:

Signed contract of sale (for purchases)

Council rates notice (for refinances)

Having everything ready upfront prevents back-and-forth and speeds up approval.

Tip 3: Improve Your Credit Profile

Your credit score can be the deciding factor between approval and rejection, and between a competitive rate and a premium rate. At least 6 months before applying:

Pay every bill on time — set up automatic payments

Avoid applying for any new credit (each application shows on your file)

Reduce credit card limits to what you actually use

Pay down or close any buy-now-pay-later accounts

Check your credit report for errors and dispute any inaccuracies

What to avoid:

Missed or late payments

Payday loans (major red flag to lenders)

Multiple credit applications in quick succession

Large unexplained deposits or withdrawals

Tip 4: Demonstrate Genuine Savings

Lenders want to see that you have the financial discipline to manage a mortgage. Genuine savings — money built up over time through regular saving behavior — carry significant weight. What counts as genuine savings:

Money held in a savings account for 3+ months

Term deposits

Shares held for 3+ months

Equity in existing property

What may not count:

Gifted funds (though family gifts can be accepted with documentation)

Tax refunds received recently

Inheritance

First Home Super Saver Scheme withdrawals (treatment varies by lender)

Aim to show a consistent pattern of saving — regular transfers to a dedicated savings account every payday look excellent to lenders.

Tip 5: Use a Mortgage Broker

A mortgage broker accesses dozens of lenders on your behalf, at no cost to you. They are paid by the lender after settlement. Benefits of using a broker:

Access to banks, credit unions, and non-bank lenders

Knowledge of which lenders suit your circumstances

Protect your credit file by applying to the right lender first time

Help prepare your application to maximize approval chances

Negotiate rates and features on your behalf

Support throughout the settlement process

Choose a broker who:

Is accredited with the Mortgage and Finance Association of Australia (MFAA) or Finance Brokers Association of Australia (FBAA)

Has access to a wide lender panel (20+ lenders)

Explains all options clearly, not just the one with the highest commission

Has strong reviews and referrals

Bonus Tip: Avoid These Common Mistakes

Changing jobs before or during application: Lenders prefer employment stability. If possible, wait until after settlement.

Making large purchases on credit: Avoid buying cars, furniture, or appliances on finance before or during the application.

Moving money around accounts: Unusual transactions raise questions. Keep finances stable and predictable.

Applying with multiple lenders simultaneously: Each application leaves a mark on your credit file.

A well-prepared application demonstrates financial responsibility and significantly improves your chances of approval — and of securing the best rate available to you.