Many of us come across the issue of obtaining a mortgage loan only once in our life when we buy a home for our family. You need to prepare for it, and then it will bring you results in the form of the new house.
So how do you increase the chances of your mortgage application getting approved?
Close all loans
Sometimes the lender will not refuse a mortgage, even if you have a loan or an open credit card. But he will look at the available loan amount for you, as well as the amount that you owe. If you can refuse the card, it is better to close it when applying for a loan or lower the limit on it to the minimum necessary. Remember that the closure of the card may not happen instantly but several days after your application.
Co-borrower
A mortgage with a co-borrower can work when you alone cannot take out a loan for the amount you need. Sometimes people automatically become co-borrowers – for example, when they are married. Then all income and debts are taken into account, and they are also checked in the same way.
Errors in documents
Often the lender may refuse a mortgage for formal reasons – for example, because of errors in the submitted documents. Sometimes it is not your fault, and sometimes it is the usual mistakes. If you find them in the loan agreement, sale and purchase agreement, and other documents (even after they have been signed), you should contact the lender to invalidate the transaction and renegotiate the agreement.
Choice of housing
Your choice of housing is important to the lender. If the area you choose is assessed as illiquid, the chances of getting a mortgage are slim. Find a comfortable apartment in the city or housing in a new house.
Thus, a lender is often much more willing to provide a larger loan secured by liquid real estate.
Profession meets the requirements of the lender
In the wake of the 2020 coronavirus pandemic, lenders are wary of considering mortgage borrowers in affected industries – hospitality, sports and fitness, and catering.
It is worth mentioning the experience of the borrower. The total work experience of the applicant for a mortgage must be at least a year. Work experience in the last job is at least three to six months, depending on the requirements of a particular lender (Bank or Broker).
Thus, before going to the lender for a mortgage, pay attention to your current debts – for example, rent and unpaid taxes. It is better to pay off outstanding debts and only later go to the lender.
Written by Bader Albader, market researcher.