Most people preparing to buy focus on their credit score, because it is the easiest number to see. In Australia it is one input among several, and usually not the decisive one.
Serviceability
The main event. Can you make the repayments, assessed at roughly three percentage points above the actual rate, after your declared living expenses and existing commitments are deducted. Covered in detail in How Much Can You Actually Borrow?
The practical consequence is that clearing a personal loan or cutting a credit card limit often improves your position more than a modest pay rise, because it acts directly on this calculation.
Genuine savings
Most lenders want to see that at least 5% of the purchase price has been accumulated and held for at least three months. The point is behavioural rather than arithmetic. They are looking for evidence you can consistently set money aside.
A gift from family usually does not count as genuine savings on its own, though many lenders will accept it alongside a portion of genuine savings, and will want a signed letter confirming it is a gift rather than a loan. Rental payment history can sometimes substitute, if you can produce a ledger from an agent.
Your last three months of bank statements
This one surprises people. Lenders read them, line by line. What draws attention:
- Regular buy now pay later transactions
- Gambling transactions, including small recreational amounts
- Dishonoured direct debits or overdrawn accounts
- Payday lending or cash advances
- Large deposits that cannot be explained
The three months before you apply are effectively an audition. Behave accordingly, and keep a record of the source of any unusual deposit.
Your HECS or HELP debt reduces your assessable income, because compulsory repayments are deducted from it. It does not appear on your credit report and it is not a debt in the ordinary sense, but it does lower what a lender will approve.
Employment stability
Lenders look at the shape of your income, not only its size. Six to twelve months in a permanent role is the usual comfort zone. Changing employers within the same industry is generally fine. Moving from permanent to casual, or from employment to self-employment, resets the clock and is the change to avoid in the year before you apply.
The property itself
The property secures the loan and is assessed independently. A valuation below the purchase price means the lender lends against the lower figure and you cover the gap. Some property types attract additional caution, including small apartments under about 50 square metres, serviced apartments, and properties in single-industry towns.