My parent’s opened the door to their first real estate when I was eight. I used to think it was nine. It turns out I was wrong. Close. But wrong. And throughout the year mortgages, real estate, investing has been a big part of conversations around the dinner table. I had barely turned 18 and I was preparing to build my first house. The government was offering a first home owner boost and an additional building boost and I planned to utilise them.

Being so young I hadn’t had much time at all to get myself in financial trouble, the lending criteria was a little bendier {WAY pre-global financial crisis} and I had great support and advice from my parents. But whether you’re 18 or 48 the things on the list below will get you in good financial shape for when you go to a bank {or broker} to apply for a mortgage;

1.  Pay down/Pay Out any credit cards, closing the limit as you go.

If you have a $20,000 credit card, even if it has $100 owing on it and it’s issued by the same bank you’re applying through it will still deduct from your lending capacity {what you can borrow}. The theory is, you already have it available, so you COULD use it anytime.

The easiest and fastest way to pay credit cards down is;

• STOP USING THE CARDS. All of them. Now. Walk away.
• Pay the minimum monthly payment on all the cards. Do this every month without fail.
• Select a primary card. A problem child, highest interest rate, penalty interest or biggest monthly payment. Whatever makes it the most expensive to own.
• Now order all your cards from best to worst using the method you determined above.
• Have a set weekly amount that you pay onto the primary card.
• Put any extra money you have onto the primary card.
• Once the primary card is paid off, close the account and start on the next most vital to get rid of card. BUT keep applying the monthly fee of card one and card and weekly amount to card two.
• Rinse, lather and repeat until you’re done compounding the payment amount as each card is paid off {i.e. by 4^th card you would have 4 monthly payments and a weekly}.
• Don’t forget to close the accounts or reduce the credit limits as you go.

2.  Start saving money

Even $20 a week into an account proves you can do it if you want to. A simple way to do this is to put change into a bowl and bank it at a regular interval, have your payroll department send the amount straight off the top of you pay {we’ve done this, it absolutely works!} or pay it first as if it is a payment for rent or electricity. Your savings must be important.

3.  Reduce your expenses 

The lender will require an outline of your income and expenses. If your expenses equal, or worse exceed, your income there is no way they can give you the money. When it comes to reducing your expenses it pays to start with things you could live without. Then look at where you can reduce your necessary expenses such as electricity, gas, phone, internet or other subscription type expenses.

4.    Increase your income

Sure, I’ll get right on that. Right? But seriously, it could be as simple as asking. Most people are paid what they asked for or have settled for. If you are a good employee and deliver the result your employer is looking for. What’s the harm in asking? So your mission is increase your income so get out there and request a pay rise, apply for a better paid position within the same company {switching jobs makes it more difficult to borrow money, there are wait times involved} or taking on a paper route {not just for kids!}. The extra amount will make a difference to your overall ‘balance sheet’ with the bank.

5.    Clean up your house

If you are refinancing or looking to extend a mortgage there is a pretty good chance your home will need a valuation, which can be done with anywhere from a couple of days notice to a couple of weeks. Better you do the gardens and lawns {some banks only drive by your house} and give the place a cleanup and clear out now, rather than be rushed later.

While implanting all these things won’t guarantee you get the home loan or mortgage that you hope to get, it will send you in the right direction. If you feel you would like specific financial advice, most financial planners or bank lending manager’s will do an original consultancy for free to talk these things over. Just keep in mind, there’s no such thing as a free lunch; they have a product to sell.

So good luck! And don’t forget to share your success stories on our facebook page.

Melissa blogs at Suger Coat It; a blog about living the sweet life. She started her blog because she wanted one place to put all the cool things she found online and to write a little.

Now it revolves around trying to stay married, her getting a life and their mission to create a life. Mostly. But Melissa pretty much does what she wants. But that’s the upside of being a grown up, right?                            

Right now Melissa’s goals in life are to run 5km, to find somewhere sensible to hide all the crap that accumulates on the kitchen bench, to kill her 8 year old pc so she can get a Mac and to broker world peace.