How can I improve my chances of getting a home loan?
Applying for a home loan can feel like an uphill battle, but with the right preparation, you can boost your chances of approval and secure a better deal. Lenders look at several key factors when assessing your application, including your credit score, income stability, and existing debts. Here’s how you can strengthen your financial position and improve your odds of getting the green light from lenders.
Check and improve your credit score
Your credit score is one of the first things lenders check when assessing your application. A higher score can lead to better interest rates and more borrowing power, while a low score could mean rejection or higher costs.
How to improve your credit score:
Check your credit report for errors and dispute any inaccuracies.
Pay all bills on time – even small defaults can hurt your score.
Reduce credit card balances – high credit card debt signals financial stress.
Avoid multiple loan applications in a short time – this can make lenders think you're desperate for credit.
Tip: You can check your credit score for free through services like Equifax or Illion.
Stabilise your income and employment
Lenders prefer stable employment and consistent income. If you’re changing jobs or working irregular hours, it may raise red flags.
How to show income stability:
Stay in the same job for at least six months before applying.
If self-employed, have at least two years of tax returns showing steady income.
Avoid taking extended unpaid leave close to your loan application.
Tip: Some lenders offer options for self-employed borrowers or those with non-traditional income.
Reduce your debts and expenses
Lenders assess your debt-to-income ratio (how much debt you have compared to your earnings). If you have high existing debt, it could limit how much you can borrow.
How to reduce debts before applying:
Pay off credit cards and personal loans where possible.
Lower your credit card limit – lenders consider the full limit, even if you owe nothing.
Avoid taking on new debts (like car loans) before applying for a mortgage.
Pay off buy now pay later accounts like Afterpay and Klarna.
Tip: Lenders also review your spending habits. Cutting down on discretionary spending (like Uber Eats and streaming services) in the months leading up to your application can help.
Save a larger deposit
The bigger your deposit, the more confident lenders feel about approving your loan. A larger deposit also helps you:
Reduce or avoid Lenders Mortgage Insurance (LMI)
Secure a lower interest rate
Have more borrowing power
How to grow your deposit faster:
Open a high-interest savings account and set up automatic transfers.
Take advantage of First Home Owner Grants (FHOG) and First Home Guarantee (FHBG) if eligible.
Consider a guarantor loan if a family member can help secure your loan.
Get pre-approval and choose the right loan
Before house hunting, it's smart to get home loan pre-approval. This shows sellers you're serious and helps you understand what you can afford.
How to strengthen your application:
Work with a mortgage broker to compare loan options.
Choose a loan with repayments that fit your budget – lenders will assess whether you can still afford repayments if rates rise.
Ensure all documents (payslips, tax returns, ID) are ready and up to date.
Tip: Different lenders have different lending criteria—some may be more lenient with lower deposits or self-employed applicants. We can help match you with the right lender.
Final thoughts
The key to securing a home loan is preparation. By improving your credit score, employment stability, and savings, you can significantly increase your chances of getting approved for a mortgage with better rates and terms.
At More Loans, we work with a wide range of lenders to find the best home loan solution for your situation. Want to improve your home loan chances? Contact us today, and let’s get you mortgage-ready!
