Home is undoubtedly the biggest purchases that you will be making in your life. Some people wait and save money for years to purchase their first home. While there are some who decide to take a mortgage to full their goal as early as possible. There is nothing wrong with taking financial assistance to accomplish your goals. Purchasing a home is nothing less than an investment that will give you high returns in later. You can sell your house and get big money or even put your house on rent to earn a regular income.
“Buying your own home is a dream turning reality “
Well, this was only the financial benefits that you will get after buying your own home. There are many emotional benefits that you get too. You will get your own place to live where you and your entire family can live happily and peacefully without any ruckus of the landlords.
Now, coming to the main part- if you are planning to apply for mortgage first time, then you have to take various things into consideration. It is not easy to get the approval of a mortgage for first time buyers, as the lender will take numerous aspects into consideration. However, there are ways that you can follow to improve your chances of securing the mortgage.
Here, we have mentioned important tips that can help you with that. So, let us get started.
Tip#1:- Analyse your affordability
The first thing that you need to do is analyse your financial circumstance to know how much you can afford. You have to be realistic while applying for the mortgage. You might not get the approval if the amount that you have requested is out of your affordability range. Also, the more you will deposit as down payment, the better will be the chances to get the approval. Other than that, this will pave the way for lower interest as it will lower the loan-to-value ratio. The lender will check your affordability by getting valuable financial information such as your income, expenses, credit history and many more.
Tip#2: Know your credit score
Next important task that you are required to perform is your credit score. Most of the lenders in the market take the credit rating of the borrower into priority. So, it is important that you get a report of your credit score to know where you stand financially. If your credit rating is not proper, then you might get rejected. Hence, it is better to maintain your credit rating or build if you have enough time. Having a good credit score can help you land some great deals in the mortgage.
Tip#3: Get rid of small debts
While applying for the mortgage, the lender will check the total amount of debt that you owe. Hence, clear as much debt as possible before applying for the mortgage. Also, if you have any account that you no longer use, close it as well. This will increase the overall chances of getting approval for the debt. Having a minimal burden of debt will leave a positive impression and make the lender believe that you are capable enough to complete the amount. Getting rid of small debts will also give a boost to your credit score, thus increasing your chances of approval.
Tip#4: keep your legal documents updated
Getting a mortgage involves a lot of paperwork and there will be a good chance that the lender will go through every one of them. So, make sure all your legal documents such as address proof, driving license, salary statement and others have the right information. A wrong address in the driving license could become the reason for your application rejection. Hence, before submitting all your documents, check them thoroughly to ensure that there is no mistake in them.
Tip#5: keep the evidence of your deposit
Yes, depositing the certain amount as the down payment is beneficial. But, there will be a possibility that the lender might ask you to provide the evidence of the deposit. The evidence will help the lender to analyse your saving pattern and you might be asked to provide a bank statement of up to 3 months. Also, if you have given the deposit as the gift, then the lender might even ask you to provide a letter from the donor. The lender can consider the gift as the debt or loan if the donor expects you to pay back the deposit.
Wrapping up, these were overall tips that can help you maximise the chances of getting the approval of your first time mortgage.