The increasing economic instability facing the globe has made it more challenging to secure loans, such as home loans. More importantly, the crisis also makes it more challenging to be sure that one can honour payments.
However, if you are planning on buying your first home with the help of a home loan, there are several ways to secure your application. While you may need to have a look at furnished apartments Scarborough or find temporary accommodation once you have managed to find the home of your dreams, your very first hurdle will be obtaining financial assistance. Here’s how you can secure your application.
The self-made billionaire Jay Z said that ‘if you can’t buy it twice you can’t afford it’. This opinion may be extreme when it comes to buying property, but it is worth employing restraint before purchasing. Most repossession cases can be ascribed to issues of affordability. This factor leads to defaulting on a payment. Do not make a financially cumbersome commitment, and be sure that you still have expendable income and savings left to allocate in your budget.
You may also find that broadening your home options and considering affordable types of homes such as modular or manufactured homes, new or existing homes may also increase your affordability. This is because you will mostly need a smaller loan total if the home you are after is not exactly a lavish mansion.
Lighten Your Credit Load
We live in a very bizarre economy, in that to borrow money, you must already owe money. This system of credit rating is a little more complicated than just that, but without credit, you can’t get a loan. Conversely, if you owe too much, you may be turned down on the grounds of affordability.
The key is to balance your outstanding accounts so that the monthly premiums fall well below your affordability rating. This way, the bank can see that you will honour payments but that you are not over-encumbered.
Do Not Apply To Too Many Banks At Once
Lending institutions register loan applications with the credit bureau. Every institution that rejects your request informs the decision of the next. This impact can go as far as to make it impossible for someone perfectly financially capable to receive approval on loan.
The ramifications may even extend beyond real estate. Car companies, credit card companies and just about any institution from which you may wish to receive credit have access to this information, and it will inform not only their decision to approve but the credit limit they will offer.
Have A Savings History
This may seem a bit personal, but banks look at your judgement when it comes to working with your money. Then go as far as to look into how, when and where you spend. If you are running a zero balance by the end of every month, this does not bode well for you.
Should you have a history of saving money, particularly in a sensible percentage of your income, this counts as a massive pro for your application. This extends to the degree that it is beneficial not to offer your entire savings as a deposit, rather just a percentage, showing further financial literacy.