To be honest, lenders these days aren’t exactly offering home loans like Santa Claus handing out Christmas presents to little children. The process of getting a mortgage approved has got complicated over the years. Banks and money lending corporations have come up with two to three layer checks and verification system to keep the potential defaulters at bay. But does that mean the chance of getting a home loan is really slim? Well, that’s not true! Taking care of a few things mentioned below will ease up your loan approval request.
A Healthy Credit Report
A good credit score holds the key for securing a home loan and that too at low interest rates. So what exactly is a credit score? Simply put, it is a three digit number which gives the money lender an idea regarding the amount of risk involved in lending money to the borrower. Different lenders use different credit score range but one thing that is common in them is the principle of “the higher, the better”. So, the higher your credit score, the better are your chances of securing a loan for your dream abode. Thus prior to applying for a home loan, ensure that you have a good credit score. You can get your credit report generated free of cost through various online tools and software. Paying bills on time, keeping the credit card expenses low are some great ways to have a good credit score.
Borrower’s Employment History
Your employment record is an important factor for the bank or lender to determine whether or not you qualify for a home loan. It shows how likely you are to repay the loan off within the stipulated period. A steady employment history with no change of workplace at least for a period of 8 to 10 months will boost up your chances of getting a home loan.
The Down Payment Size
The down payment is an initial amount paid (usually in cash) to the lender or bank when something is bought on loan. Ideally the size of down payment should be around 20% of the loan value. However, it can be as low as 5% too. Keep in mind that higher down payment usually results in low interest rates and flexible paying options.
Monthly Expenses
Whenever you apply for a mortgage, your lender will scrutinise your monthly expenses very minutely. Make sure you include all the details of your expenses including mortgage payments and property taxes. The combined monthly expense should not be greater than 28% of the total monthly income. However, in case it exceeds 28%, there is not much to worry. You should provide valid reasons and explain to the lender that you are more than capable of repaying the debt off.
Some tips to take care of the legal side of a home loan are:
- Home loan terms and conditions vary from lender to lender. You should make a detailed comparison to choose the one best suited to you.
- Home loan terms and conditions are usually not laid down in a very lucid way. So a person with no legal knowledge could have a hard time trying to figure them out. Thus consulting a conveyancer is a good thing to do.
- A conveyancer will also take care of the legal aspect of transferring the property rights from the seller to the buyer.
- You could visit the websites of various online conveyancers or walk up to their office to get professional quotes like London conveyancing quotes to have a first-hand idea about the charges involved.
Following all these laid out basics, getting a home loan should not be a tough job for you now. Good luck!
Author Box:
Frank Spark is an expert at managing your Finance and helps you secure a home loan for you at attractive interest rates. In addition he suggests roving your eyes over genuine quotes like London conveyancing quotes to keep you safe from any financial surprise.