8 Ways to Strengthen Your Loan Application
If you’re now looking to buy, or even refinance your existing loan, there are a few ways to increase the chances of your loan application being approved.
Keep in mind the things that lenders consider before approving your application. These include your credit report, existing debts, income, assets and spending. This helps them form an idea of your ‘creditworthiness’ and whether you could comfortably meet repayments. That said, there are ways to make yourself more attractive to lenders.
Some quick tips to improve your creditworthiness when applying for a loan.
1. Check your credit report
You can get a free copy of your credit report. It is a good idea to check there are no mistakes and all listed debts are correct. If anything is incorrect, you can request them to be fixed by the credit reporter. I can help you get your credit report.
2. Review your spending
Have a look through your bank statements to see where your money has been going. If there are unused subscriptions or unnecessary spending, it is a good idea to unsubscribe or cut them out in the future to show you are responsible with your spending. It can also help to create a budget to see areas for improvement.
3. Pay off debt
Make sure you keep up with any debt repayments and consider making additional repayments where you can. This can help you save on interest and also show you are responsible with debts. It is also a good idea to pay off any buy-now-pay-later debts to reduce the amount of credit you are owing.
4. Consolidate debts
It can be worth reviewing your debts to see if consolidating them could save you money. This can include home loan, car loan, credit cards and personal loans.
5. Eliminate extra credit
If you have credit cards in your name that you are not using, it can be helpful to cancel them. This is because the lender will look at the amount of credit you can access, which can reduce the amount they are willing to lend you.
6. Space out credit applications
It is a good idea to spread out applications for credit where possible, particularly if you are rejected for a loan. When lenders see multiple recent applications, they may be more wary about lending to you.
7. Demonstrate genuine savings
Lenders look at how well you can save money over time. This means that cash gifts or inheritance, while helpful to boost your deposit, won’t be considered toward the lender’s assessment of your saving habits. Do your best to make regular deposits into your bank account to show you can save.
8. Work with a broker
Okay, this one is obviously a self plug. However, an experienced broker knows lenders’ policies and what they look for in an application, and can help you not only apply for a suitable loan but also help you put your best foot forward.
Whether you are looking to purchase your first home, next home, use equity to purchase an investment property or refinance your home loan, I can help you find the right solution and make your application as solid as possible.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
Explore other FAQs and Facts
How the property market looks as we head into 2025
Australia’s property market is shifting, with a clear divide between strong and weak performers. While Brisbane, Perth, and Adelaide see robust growth, Sydney, Melbourne, Canberra, and Hobart face slower gains. As interest rate cuts loom in 2025, understanding regional trends will be essential for buyers and investors alike.
December cash rate on hold: 6 reasons to be optimistic about 2025
The Reserve Bank of Australia has kept the cash rate on hold once again, maintaining its cautious stance. While hopes for a rate cut remain unfulfilled, there are six reasons to stay optimistic, even as inflationary pressures and low productivity continue to shape the RBA’s approach to economic stability.
Australian properties see record profits in 2024
The 2023-24 financial year marked a milestone for Australian property sellers, with 96% of houses sold nationwide yielding a median profit of $326,000. This trend reflects the long-term value growth of homes, with capital cities and regional areas both benefiting from a robust market and rising property prices.
The pros and cons of rentvesting
With housing prices up 37.8% since 2020, many Australians face tough choices between renting in desirable suburbs or buying further from city centres. Rentvesting offers a middle ground—renting where you want to live while investing in an affordable property. This approach can build wealth but requires careful financial planning.
5 reasons why this might be a great time to buy
With Australia’s property market cooling, some may see now as an opportune time to buy. While timing the market is tricky, reduced competition, rising rental prices, and potential long-term gains could make this a strategic moment for both first-home buyers and investors to consider entering the market.
How to consolidate tax debt
Struggling with ATO tax debt? If you miss payments, the ATO may charge 11.36% interest on unpaid amounts. One option is to consolidate your tax debt into your home loan, potentially saving on interest, though refinancing costs apply. Speak with a mortgage broker to explore this option and avoid further penalties.
How is interest calculated on my home loan?
Mortgage interest is calculated daily based on the remaining principal, but the reduction of the principal isn’t linear. In the early years, a larger portion of each payment goes toward interest. However, by making additional repayments or using an offset account, you can reduce the principal faster and pay less interest over the life of the loan.
How do green home loans work?
As Australians seek to minimise their carbon footprint, green loans are becoming popular. These loans finance energy-efficient homes, renovations, and eco-friendly products like solar panels, EVs, and insulation. With potentially lower rates and flexible terms, green loans also boost property value, as sustainable homes attract more views and sell faster.
Dream Home Dilemma: Should You Build or Buy your home?
Deciding whether to build a new home or buy an established one is a major step in your homeownership journey. Each choice has its own set of pros and cons, from the opportunity to customise your space to the convenience of moving into an existing home. Understanding these differences can help you make the best decision for your future.
9 things to prepare before buying a home
To ensure a smooth property purchase, start by boosting savings and avoiding job changes three months before applying for pre-approval. Check your credit report for errors, consult a mortgage broker, and choose a conveyancer. Research locations, attend open homes, and arrange inspections. Contact me for expert guidance and loan pre-approval.