Director of MoneyQuest Dubbo Matt Wright said it is still possible to get a housing loan, but you do need to be prepared.

“The banks have already adopted more prudent lending criteria and the process of getting a loan has become harder, banks are now assessing loan applications forensically,” he said. 

“But there are a few things people can do to make the process smoother and perhaps more successful for them.”

Remove extra living expenses.

“In the three months leading up to when you are going to apply for a loan have a good look at your day to day expenses,” Mr Wright said.

“Start removing the things you might not need, things like Spotify and Netflix subscriptions, gym memberships that you might only use occasionally, direct debits that regularly come out of your account, so getting your house in order with those things is a good start.”

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Preparation 

“Preparation is key,” Mr Wright said. “Get in and see a finance expert as soon as you think you’ll need a home loan and go through a process of reviewing your finances.”

Savings

“Have a solid savings history that a bank can see,” Wright said. “From the lenders, perspective savings show them that the borrower has the discipline to commit to putting money aside and meet certain commitments, to accumulate funds and be disciplined enough to do it on a regular basis shows a bank you may be in a position to pay off a loan.”

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Protect your credit history

“There have been changes in regards to credit reporting over the last six to 12 months,” Wright said. Lenders look into the loans you have and whether you’ve met the repayments or not. “So people need to be very mindful of protecting their credit history, your credit behaviour does impact on how a bank will see your suitability for a loan.”

“Australia used to report on a negative system, if you did something bad it would go up on your credit file. Now if you do something good it also appears and it is much more in depth.

“It goes into the loans you have, whether you’ve met the repayments or not and what types of credit you have or do have. Lots of short term loans may not look as good as a more substantial loan (car loan) that was paid off on time.”

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Be realistic

“Most first home buyers are realistic and understand they can’t buy the Taj Mahal as their first home,” Mr Wright said. 

“There is still a long way to go before any of the Royal Commission’s recommendations come into law, but if there is to be a further tightening of credit than the cogs of the economy will stop turning which would be a worse outcome than expected.

“Loans will still be given; they have to for the economy to keep spinning.”