Burgess Thomson Lawyers

Tips for Securing A Mortgage as a First Home Buyer: Building Your Credit and Enhancing Your Eligibility

real estate first home buyer

Are you a first home buyer or owner grappling with obtaining a mortgage or filling in mortgage documents?

When buying a home for the first time, many considerations and challenges can arise even before going through the motions of purchasing a property. One sometimes overlooked area which people can be caught off-guard by is whether or not, as a first home buyer, you have enough creditworthiness so that a lender will provide a loan to you in the first place.

So, what is creditworthiness? How do you maintain a good credit report? And why should you do this?

Here we will highlight some essential tips, insights and strategies which you may wish to consider in order to enhance your appeal to financial lenders as a first home buyer.


What is Creditworthiness?

Essentially, your creditworthiness is a measure of your ability to pay back loans and debts as well as having financial sense to ensure that, should an unforeseen event require attention, you have appropriate funds and can manage your finances should things go awry.

Generally, if you are seeking a loan from a bank or other lender, they will conduct a creditworthiness check on you to make sure you are capable of repaying the loan and will not default.

Things that are often looked into are; income, assets, spending and the ability to pay your debts from small things such as a phone bill to larger obligations such as rent, having a good credit rating makes you more appealing to lenders as it demonstrates your ability to handle money responsibly.

You can ask for a copy of your credit rating report at anytime from the credit reporting companies that banks also turn to view your history; Equifax, Illion and Experian Australia are the primary agencies.


How to Build your Credit

Building a good credit score is essential if you want to borrow money or obtain a mortgage. It is often simpler than people think to either build or maintain a sufficient or exemplary credit score. Some strategies include:

  1. Pay your bills on time;
  2. Fewer applications for credit is deemed a mark of good financial sense;
  3. Low credit balances are also a reflection of your ability to handle money responsibly;
  4. Paying off outstanding balances; and
  5. Paying off credit on time.


Things that negatively impact your credit score include:

  1. Late payments;
  2. Continuous applications for credit;
  3. Higher credit balances;
  4. Defaulting; and
  5. A murky credit history.


As you can see, maintaining or enhancing your credit rating is as simple as handling money responsibly and demonstrating that you are not reckless in how you manage financial obligations like paying off debts.


Importance of Good Creditworthiness for First Home Buyers

As a First Home Buyer, chances are you’re fairly new to the world of credit and lending. It can take time to accumulate a good credit score and so to start early with the aforementioned strategies is a good way of highlighting that even from before needing to ask for a loan, you have adopted and maintained effective and responsible financial habits that will be seen by a lender as the mark of someone who is capable or perhaps even likely to pay back the mortgage offered to you.

A low credit score can mean that first home owners are subject to higher interest rates or even a denial of your mortgage application making the task of looking for a property more challenging than it already can be.

It is important that you understand the interactions between credit ratings and securing your first mortgage before you move forward. The team at Burgess Thomson has substantial expertise in Property Law. With over 60 years’ combined experience, our solicitors have successfully assisted many clients from start to finish. We are known for sound advice and our ability to comprehensively answer any questions in our area with utmost diligence.

Experienced solicitors who have a keen eye for detail are becoming more sought after so if you wish to discuss your matter with our team, please do not hesitate to call our office on (02) 4929 5602 to arrange an appointment.


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