No matter how experienced you are in the property market, getting financing for a new home is more difficult now than it has ever been before. Part of this is due to the royal commission issuing new regulations meant to crack down on bad lending practices. Banks are taking a closer look at people’s finances before approving them, and they are more likely to say “no” than they have been in the past.

However, don’t let this scare you away. Banks are still lending money – they have to if they want to make money – and they will give you a mortgage if you take the right approach. So, here are some things you should and shouldn’t do when applying for a mortgage:

You Should Get a Hold of Your Finances

To get approved for a loan, you need to show you can actually repay it. This means having your finances in order well before you go into your first loan interview. If your rent payments are less than what your mortgage payments will be, you need to be saving the difference every month, and have proof that you’ve been doing that, to show that you can meet the terms of the loan.

It’s also smart to spend some time cutting back on other expenses. In the months, or even years, leading up to your first home purchase, take a look at your finances every month to figure out where you can save. Demonstrating frugality and fiscal responsibility to the bank is going to work significantly in your favour when it comes time to apply for a loan.

Of course, if you’ve already purchased a home at some point in your life, things will be easier, as your previous payments will serve as proof that you can make payments. However, this doesn’t guarantee you a loan, so still spend time making sure all your accounts are in order so that your loan application interview will go a lot smoother.

You Shouldn’t Give the Mortgage Broker Reason to Worry

At the end of the day, a mortgage broker’s job is to asses risk. They are trying to figure out how likely it is the bank will get its money back after it lends it to you. This means your broker will look at how much money you spend each month, but, perhaps more importantly, they will also look at how you spend your money.

Shelling out hundreds of dollars a month in alcohol, tobacco, and gambling will throw up a huge red flag to the mortgage broker. On the other hand, they might not be concerned about streaming services and food delivery, even if you’re spending the same amount of money. This is because these habits can be changed if needed, whereas addictions are tough to beat, and they can quickly take control of your bank accounts.

Another thing to look out for is your dependence on credit. If all your credit cards are maxed out, and you’re not making serious payments, then this could hurt your chances. Ideally, you should have no credit cards. But if you do, keep it to just one and make sure it’s paid off.

In the end, if you’re smart about your money and think like a mortgage broker thinks, you’ll be able to put together a loan application that stands a good chance of getting accepted, bringing you one step further to landing that dream home.