Unless you are a rocket scientist paid in gold or you have inherited a fortune, chances are you will need to borrow money to buy your first house. Some people have high expectations regarding the money they can get, only to face serious disappointment later on when they get rejected. Here are a few helpful tips to ensure you will get accepted.
Save up for a fat deposit
The bigger your deposit, the less money you will have to borrow. At the same time, you will face lower interest rates, while the lending institution takes less risk with you – meaning you are more likely to get your application accepted.
While you can get a mortgage with anywhere between 5% and 15%, the best deals on the market go for users who can come up with 30% to 40%. They show great responsibility and the risk is relatively low, hence the great deals.
In other words, it might pay off by delaying the application for a bit and saving anything you can.
Get rid of unsecured debts
A mortgage lender will analyse your financial situation in small details and will take a look at your income and expenditures. No matter what other loans you have, you will have to pay for them in one way or another. It pays off doing it before applying for the mortgage. The less debt you have, the better. Especially if the debt is in the form of bad credit payday loans or similar.
Clear as much debt as you can, but also get rid of the account you no longer use. Too many accounts may raise some question marks and lenders could be a bit worried about your capacity to pay – get rid of them and maintain a clean profile.
Stay away from unusual places
Unusual properties come in all kinds of shapes and sizes. You may want to stand out in the crowd, but your lender will see the situation in a completely different way. For example, no matter how unique your potential place is, your lender will try to determine whether or not they can sell it should you default on your payments. As a direct consequence, lenders are anxious about unusual properties and may find it more difficult to accept you.
This category is quite diversified and there are no written rules. For example, flats above cafés and bars might be difficult to sell. The same goes for buildings erected with unconventional materials – such as steel or concrete.
Update the electoral roll
Every lender will take you through a proper check in order to verify who you are. Your mortgage application could be refused if you are not responsible enough to register on the electoral roll. Even if you are already there, make sure it is updated with your current address. Such details must perfectly match.
The good news is you can make this change overnight. Get in touch with the local authority and try to make updates online. Also, you might want to update your address on credit agencies – chances are the lender will get in touch with them.
Use a broker
Find a broker who will not charge you anything. Some brokers are paid by lenders once they establish the connection between you and them. While the service is free, it does not mean you can settle for any broker out there. You want someone who will not try to sell you expensive services for a higher commission, so do a bit of research upfront. They know what you need upfront and will ensure your application is smooth.
Bottom line, these five tips will give you a plus when it comes to getting a mortgage and will increase your chances to get your dream home faster.