How to get a loan post-royal commission

The banking royal commission is leading to changes designed to protect consumers but it is also making it harder to get a loan.

Editor of Money Magazine Effie Zahos appeared on the TODAY Show to explain all the things you have to consider when applying for a loan.

One of the key aspects of your finances that a lender looks at is your credit rating, Zahos explains.

"Your credit rating is so important - it's your financial footprint. Come July 1 there is some good news for consumers because if you've been good with your repaying banks have to share that repayment history," the finance expert says.

"So you've got your repayment history. If you're late, for example, 15 days on repaying your credit card that shows up as a red flag or you receive a default if you haven't paid your bill and its over $150 over 60 days - that will be on your credit report as well."

Lenders also pay attention to your income and your savings.

"Your income and your savings are the two key things - are they stable? Are your savings genuine? Where are they going? The royal banking commission is going to make getting a home loan harder and it will also take longer."

Age is another factor lenders look at.

"While they can't be ageist, if you're a 50-year-old, even someone in their 40's, you could be paying off that home loan well into your retirement, so they are going to look at how you're going to finance the loan and having the property isn't going to be enough, you'll need to have a better exit strategy," Zahos explains.

And just how is the royal commission into Australia's banks going to change they way they lend money and what can you do to up your chances of getting their cash?

"What we saw coming out of the royal commission is things like ANZ saying, on record, that they haven't checked expenses very well. Banks aren't really good at checking expenses (ironically) and over 50 per cent of all home loans are coming form mortgage brokers - it's a sales culture."

Tips to improve your chances of getting a loan

• Check your credit card history and credit score
• Reduce your credit card limits
• Downsize your lifestyle
• Hold off on career changes
• Buy the right property
• Go in prepared