The world of mortgages can seem daunting from the outside, but when you’re trying to buy a home there’s always help at hand. When you’re applying for finance, there are three key factors in getting your home loan approved:
- loan serviceability
- your credit rating/score
- your deposit
Improving each of these can help you get the best home loan available. Let’s see how:
Home loan serviceability
The serviceability of your home loan is your ability to make your repayments. Lenders feel more confident giving out a million dollars if they think it will be paid back. Banks make an assessment of your serviceability based on:
- you (and/or your partner’s) level of income.
Obviously, if you earn more, you’ll be able to pay back more. You’ll need to provide a lender with evidence of your stable income as part of your application – generally at least three months of payslips. Things are a bit different if you’re self-employed, but many lenders will want to see two tax returns showing your income.
- you (and/or your partner’s) level of expenses and other commitments
Even if you’re making bank, if you’ve already committed to spending it through subscriptions, loan repayments and general expenses, there won’t be much left to repay your mortgage. Lenders will want to see that you have enough room in your budget to make the repayments comfortably.
You will usually be required to show a budget of your realistic income and expenses. Ideally your income should exceed your expenses by as much as possible to show that you can afford your home loan repayments. Some expenses, like gambling, can be a major red flag if they make up a large part of your spending.
Credit cards can also impact your borrowing power. Even if the balance is at zero, the fact that you can spend on credit will lower how much you can borrow. Cancelling your credit cards will immediately boost that, and then you can re-apply once you’re approved.
- the amount you want to borrow
The more you want to borrow, the higher your repayments will be.
You can reduce the repayments by applying to increase your loan term to 30 years instead of 25 years. However, it’s important to understand that you’ll pay more interest by having a longer loan term.
If you end up in a better financial position down the line, you can either make extra payments or refinance your loan.
Your credit rating/score
Your credit rating is a score based on your past credit repayments. If you always make your repayments on time, you’ll have a good credit rating.
However, if you make late payments or default, you’ll develop a bad credit rating and you’ll find it harder to get finance. Your credit rating is compiled by credit reporting agencies. Lenders will access it as part of assessing your home loan application.
It’s important to note that utility services like mobile phone plans and electricity are all forms of credit that can affect your credit rating.
In Australia, there are three credit reporting agencies. You can get a free annual check of your rating with each one:
The amount of deposit you can provide for your home loan
The amount you need to borrow is known as the ‘funds to complete settlement’. Your total purchase costs will include the price of the property plus any associated fees such as:
- stamp/transfer duty (use our free stamp duty calculator here)
- conveyancing costs
- building/pest inspections
- lenders’ mortgage insurance (LMI)
The table below shows you how much deposit you need in dollar terms if you can provide a 20% or 10% deposit on a property worth $750,000 and a property worth $500,000.
| Property value | 10% deposit | 20% deposit |
| $750,000 | $75,000 | $150,000 |
| $500,000 | $50,000 | $100,000 |
As of 1 October 2025, the government has extended the First Home Guarantee Scheme to make it easier for first time buyers to get on the market.
How we can help
At Wisebuy, our mortgage professionals and licensed brokers can help you to get a home loan.
We’ll take the time to understand your individual situation before providing you with advice. We understand the lending criteria of different lenders, so we’ll recommend an appropriate lender for your situation. We’ll also help you with your loan application. And best of all, our service is free!
