Applying for a mortgage is not complicated. There are standard criteria and if you fulfil all of them then the whole process can be an easy process. The trouble begins if you fall short on any one criterion or more. There are essentially three aspects of a mortgage application and subsequent approval. Your present income and the home loan amount you seek; the value of the home and the loan to value; your credit history and supporting documents including proof of income, tax records and vetting of personal details.
- You could be employed or you may have a business. You may be employed fulltime or part time. You may be self-employed or you could be an investor. Most mortgage lenders, banks and financial institutions, will need you to be employed for at least six months prior to applying. The longer you are employed, more preferably with the same employer or in the same business, the higher are your chances of getting approved. Being employed for many years and especially with one employer indicates financial stability and predictability, both of which are treasured by mortgage lenders. Self-employed people and business owners will need to be in their occupations for more than two years.
- Credit history will be a quintessential factor while applying for mortgage. Bad or poor credit scores will almost always disqualify applicants. A healthy credit history and little or no debt are desired by almost all mortgage lenders. If you have poor credit, you may want to repair your credit history before applying. There are concessions that lenders make for those with relatively poor or not so great credit scores but then the rates of interest are higher. The loan amount you would qualify for will also be substantially lower.
- Income is one of the most important determiner of how much loan you would qualify for. Every mortgage lender will assess your income, figure out your disposable income and only then start working out the loan amount you may be approved for. The value of the home, the amount you would repay every month as mortgage and the loan to value ratio will also figure in this assessment.
- The down payment or deposit you make will influence your approval. The higher you pay upfront, greater are your chances of getting approved. There are some other aspects as well such as the financial assets you have, the debts or financial liabilities you are dealing with right now and the number of dependants you have to take care of.
In need of expert advice? - Call YNM today!
