According to Peter Camphin, the director of strategic partnerships at LoanMarket, there are two vital points that determine whether homebuyers can borrow enough to buy their next home.

“Banks basically want to know whether you can service the debt and if you have adequate equity in the property if things go wrong,” he said

“Conditions have only become tighter because banks are scrutinising a borrower’s expenses more closely, and that makes the process more complicated and sometimes a lot slower. If you’re shopping around for a home then you should be shopping around for finance, yet a lot of people don’t know how to do that.

CoreLogic data shows that over the past 12 months, almost 55 per cent of Australians buying property went through a mortgage broker to secure finance.

This is up from about 30 per cent three years ago.

“Australians have a generational loyalty to their bank, but the fact is that our brokers in many cases can get a better deal than a customer who has been with a bank for 10 years,” Mr Camphin said. 

“Before you even start looking, the best chance of securing the perfect property is by first gaining a formal pre-approval for a loan that lasts for 90 days. A broker will shop around and look for the best deal to suit your circumstances.”

Mr Camphin told WILLIAMS MEDIA the property market is full of hard luck stories where banks have rejected applications by borrowers.

“These days banks expect the applicant to provide three or four months of bank statements, as well as credit card statements, rental payments, subscriptions and the like, so you can’t hide anything. Sometimes borrowers who have been rejected have just failed to complete their forms correctly. 

“We’ve had many borrowers in these situations who have come to us and secured a competitive loan after we shopped around different lenders. That happens all the time and the turnaround for approval can be as quick as 48 hours.”

If you're heading for auction, you have even more reason to get your finance in place ahead of time.

“If you want to be in the strongest position at auction you must be pre-approved and you must speak to a broker,” Mr Camphin said.

Ray White Surfer Paradise CEO Andrew Bell has urged buyers to get their finance in order.

“Knowing how much you can borrow and bidding with confidence is essential to securing the property you want at auction,” Mr Bell said.

“The real estate industry welcomes the new lending regulations as it ensures proper tests over loan applications are applied.  This will lead to far fewer mortgagee sales and greater protection against real estate cycles.

“However, the new rules and regulations have made it more important than ever for real estate buyers to work through finance brokers.

“They know how to complete what is now generally an application form of more than 13 pages long, and they can usually process the application in quicker time than going it alone.”

Related reading:

Is it time to review your home loan?

Property market jitters see Aussies preferring fixed-rate home loans

As loan squeeze takes toll on clearance rates, experts call for six-week auction campaigns