Top mistakes to avoid when applying for a home loan

Applying for a home loan is one of the biggest financial steps you’ll take. It can be exciting – but also a little overwhelming, especially if you’re doing it for the first time. The good news is that many of the common mistakes people make can easily be avoided. Here are some of the top missteps to watch out for when applying for a home loan – and how to get it right from the start.

Not checking your credit score

Your credit score plays a big role in how lenders assess your risk. A good score could mean a better interest rate, while a poor one might lead to a declined application or a more expensive loan. Before applying, check your credit report to make sure it’s accurate. If there are any errors or outdated information, get them corrected as soon as possible.

Applying without a budget

It’s tempting to focus on how much you qualify for, rather than how much you can comfortably afford. Just because a bank offers you a large loan doesn’t mean it’s a good idea to take it. Create a budget that includes all your monthly expenses, from groceries to insurance, and be realistic about what you can manage. This will help you avoid becoming ‘house poor’ – where most of your income goes towards your home. There are also online calculators to help you budget more accurately.

Overlooking additional costs

Many buyers forget that the home loan is only part of the cost. There are also transfer fees, bond registration fees, rates, levies, insurance and moving costs to consider. These extras can add up quickly, and if you don't plan and prepare, they can cause unnecessary stress. Make sure you understand the full picture before signing any important paperwork.

Not getting pre-approved

Home loan pre-approval gives you a clear idea of what you can afford and shows sellers that you’re a serious buyer. It also helps speed up the process once you’ve found a property you love. Without pre-approval, you risk delays – and even losing out on your dream home to someone who’s better prepared.

Changing jobs or taking on new debt

Lenders want to see stability. Changing jobs, applying for a car loan, or opening a new credit card during the application process can affect your affordability and put your home loan at risk. Try to keep things steady until the home loan is approved and registered.

Failing to compare offers

Many people make the mistake of going straight to their bank without exploring other options. A bond originator like BetterBond can help you compare offers from multiple lenders, potentially saving you thousands over the life of your loan. BetterBond also negotiates on your behalf and helps you get the best possible interest rate – with no cost to you.

Rushing the process

Buying a home is a big decision. Don’t rush it. Take the time to understand the terms and conditions of your home loan, including interest rates, repayment periods and any penalties for early settlement. If anything is unclear, ask questions. It’s better to delay slightly than to commit to something you don’t fully understand.

Not getting expert advice

There’s no shame in asking for help. Whether it’s from a bond originator like BetterBond, a financial advisor or a trusted estate agent, expert guidance can make all the difference. They can help you navigate the process, avoid pitfalls and make informed choices based on your unique personal situation.

Applying for a home loan doesn’t have to be daunting. By doing your homework, planning ahead and avoiding these common mistakes, you’ll be in a much stronger position to secure the right loan – and enjoy the journey to homeownership with confidence.