Many lenders and mortgage brokers are warning that they expect to offer few mortgages and this sends an alarm to anyone warming up to get a loan. However there are several tips that can make you have a greater chance of getting a mortgage. I will take you through them.
First pay off any loans and debts
Never miss any credit card payments or loan payments since they stay on your credit record for a long time. Making sure your credit file is as good as possible is the first key thing to do. Try to clear debts before you contact a mortgage broker. The goal in this case is to reduce your overall debt to income ratio and improve your credit score. Note that generally mortgage brokers prefer not to go for a total monthly debt that exceeds 36 percent of your gross monthly income.
Spend little and save a lot
You also need to save a lot and spend small. You will need at least 10 percent of the purchase price of a property so that a lender will take your application into account. Some will go up to 25 percent others more. Having a good savings and depositing record, it can give you good rates.Â Any mortgage broker will want to see positive down payments. You need to show some skills and abilities in managing your own money before borrowing from others! It is easier to get a loan if you have a lower payment. This reduces the so called loan-to-value ratio and improves your chances of attaining a loan. Train yourself in how to save!
Make repayments on time
Most mortgage specialists will check into your payment history so that they can make predictions. The time you take to pay of your bills may illustrate your dedication to repaying your loan. The lender looks at long term behavior to predict long term behavior. Your mortgage broker can help though.
If you have had trouble with credit in the past, it’s advisable to open another account and use it responsibly. Try not to borrow too much money and be cautious about paying on time. It can take a long time to recover the reputation of poor bill payments so it’s advisable to start early. If you are behind on your repayments, try to catch up on time and pay so as to keep your accounts current. Then you can avoid adverse credit and scores.
Apply for less credit and do not cancel existing credit cards
Lenders will always look at how long you have maintained your accounts and will recommend responsible repayment. You may look desperate for some sudden cash if you open too many accounts. This can also affect your debt-to-income ratio. Most lenders will be interested in credit utilization. They will want to know how much cash you owe at that moment in relation to the credit you have available.
Go the extra mile; collect your paperwork together
Speak to and interview mortgage brokers and specialists to get all the possible information you need to discover what different banks and societies have available. Get to know their reputation and how they do business. Mortgage lenders will always want to analyze your bank statements, assets, credit documents, income tax returns and any financial statements. You should make copies of them in case of misplacement. Generally mortgage brokers will also want to see your last three bank statements and your address. Having these will speed up the possibility of you getting a mortgage.