Along with funeral plans, buying a home is absolutely a fantastic financial investment. However, if you plan to achieve this goal using a mortgage plan, then you need to pay attention to certain steps that can increase the chances of your application being considered.
While you can always go online to compare financial products like mortgage, it is always imperative to first identify some factors that may hinder your chances of being qualified. The ability to understand the mortgage process and to meet up with lenders’ strict requirements for qualification has been a major obstacle for many prospective homeowners to overcome. Understanding the lending process and what to do can be a deciding factor if your application will be considered or not. Considering this as a challenge, we have put together the best tips you should put into consideration to stand the chance of being considered for a home loan.
Prepare all necessary documents
One of the best things you can do to stand the chance of being qualified for a mortgage is to have well-prepared documents. These documents should be able to prove who you are and your identity. Documents like passport, driving license, credit reports, and account history to mention but a few must be up to date. Additionally, some lenders may ask you to provide some relevant documents like your recent bank transaction history or documents from a company that manages your utility. This is to help validate your credibility, as well as to ensure that you are worth the risk they are about to take on you. If you are an employed worker, you will have to provide your payslips, bank statements, and your tax documents. In case you receive a bonus, you must provide evidence for this too. If in any case, you receive money from other income sources, say in the form of child benefits, you may be required to provide documents to prove this too.
Maintain a high deposit percentage
From experience, mortgage providers keep the lowest interest rate for those with the biggest deposits. This implies that most of the major mortgage deals are limited to buyers who can afford to make deposits of 35% to 40% of their potential property value. While those with just 5% to 10% will have to settle for a higher rate if they are considered eventually. In essence, find out about the value of the home you have in mind, and afterward, save towards making a very high deposit. That way, you will stand yourself in good stead when you approach lenders.
Settle unsecured debts
One of the deciding factors for selecting you as a customer by mortgage lenders is to look at the total amount of credit you can access, and also the amount of money you owe. To maximize your chances of getting a mortgage, you should seek trust deed help to clear as much of your debts as possible and also close any unused accounts. Lenders are usually concerned about how you can keep up with your mortgage repayments. So when they see that you have so many unsettled debts at hand, they may be reluctant to consider your application even if you tick all other boxes.
Understand the type of mortgage you want
Mortgages come with different rates and terms. To stand the chance of being considered, you need to decide on the type you are applying for. First and foremost, research about the available lenders and the packages they offer. While many lenders may prefer to offer you a standard variable rate (SVR) mortgage, you may be better off opting for a fixed-rate mortgage or a discounted rate mortgage. By and large, weigh your options and choose the one you are more likely to secure. Lenders put into consideration the possible interest rate rise when trying to determine your affordability, but if you think you wouldn’t be able to meet up with the inherent future increase in payments of SVR, then, you should go for a fixed-rate deal.
Get the latest deals or use a broker
Once you have decided on the type of mortgage you want to apply for, the next thing you should do is to get the latest possible deals that best fit your circumstances. The possibility of you finding a cheap deal will save you some thousands of pounds in the long term.
On the other hand, it is also reasonable to use a broker while trying to get the cheapest possible deal because you may not be able to get it on your own. Using a broker will help you get the right mortgage while giving you the satisfaction of making the right choice. Additionally, a broker might also come in handy if push ever comes to shove with your mortgage repayments. Many of them are quite experienced, and as such, they can give you the much-needed advice you would need to stop a bailiff in the event of repayment difficulty.
Have an Up-to-date address
A lot of mortgage companies make use of the electoral roll to confirm your identity, so you stand the chance of been considered if you are registered well with the electoral roll with your current address. To update your address on the electoral roll, you can do that through local authority and request for registration, or you can also sign up online.
Your dreams of getting your perfect home can be achieved if you understand the rules of the game. Your understanding of what banks will look at maybe the difference between being accepted and being rejected.
This content is sponsored by Uday Tank.