You may be about to apply for a mortgage loan, or planning to apply for this loan sometime soon. But like any other loan application, there are several factors that can affect your loan application. Lenders will consider certain factors when it comes to deciding whether or not to offer you the mortgage you have applied for, and at what rate.
But while the financial decision lays on the lender, you can improve your standing by paying attention to these factors, and ensure that you take the right measures to improve your chances for approval.
Know Your Credit:The credit score determines your creditworthiness. Naturally, lenders will look to your credit score to make a decision on your mortgage loan application. Get copies of your credit report from the respective credit bureau and review them carefully. Check for errors or discrepancies in your credit reports. Get them corrected to the appropriate score. This will go a long way to ensure that you get the appropriate score your lender is looking out for, to get the mortgage you want.
Additional Debt Applications: You will be putting additional suspicion on yourself if you will be applying for mortgage loans at the same time you will be applying for a credit card or opening a current account. These financial products, in particular, will increase the chances of debt in your profile. Lenders will consider all the liabilities in your financial profile, and investing in such products at the same time you will be applying for the loan, will increase a chance of rejection on your loan application.
Income: Your income will play an important role when it comes to affording the loan. You need to possess a steady income so that you can afford to repay back the borrowed funds until the tenure of the loan is met. Therefore, you should avoid changing or quitting your job right before you apply for this loan.
Interest Rates: The interest rates you opt for may not determine whether or not you should get a loan. However, they will determine how much you will have to pay each month. While you can opt for a floating rate or a fixed rate, you need to consider how it will work in your favour and how you can benefit from it.
Know Your Price Range: Your lender may not issue a mortgage for your home, beyond what you can afford. In this stage, you need to figure out your debt to income rate. This will allow you to get an idea of how much you can afford to pay on a monthly basis.
Chosen Lender: Every lender is different, and so will their services and rates. You will need to enquire about how many mortgage applications they have approved or disapproved. This will help you understand their history and reputation.