Applying for a mortgage can often be a long process. Take a look at these three tips that could potentially help you get approved quicker.
Avoid Unnecessary Applications
By applying for loans at various lenders you may think it would streamline the process. But as you may have already guessed, it can actually have an adverse effect. For every application that’s done, the financial institution providing credit will proceed by making a ‘hard enquiry’ into your credit file. This not only corroborates the assets and liabilities you’ve disclosed but allows the lender to see other enquiries made by yourself. If they were to see multiple applications within a short period of time, they could end up questioning the intentions of the loan as well as your creditworthiness. This is further compounded if you end up having multiple knockbacks on your applications. By reducing the number of applications, you negate for both of these complications. Another solution is speaking with a professional broker, who may be able to explain different options suitable to your particular circumstances.
Getting A Guarantor
Having a parent, grandparent or other close relationship be a guarantor can help you get into the market sooner. Of course, for both parties, there are risks involved, the primary one being that the guarantor is liable if you end up defaulting on a payment. With that being said, with rising housing prices, they are becoming more and more common. They can help in getting a foot on the property ladder when a borrower’s credit score is low, not on record or has too small of a deposit. Moreover, a guarantor can help you avoid LMI (Lender’s Mortgage Insurance) if together, you’re able to reach the 20% threshold. Factors to look out for include the amount of equity they have in their own home amongst other things and varies from each lender. Down the line, as you build more equity in your own home through regular payments, you have the facility to remove them as guarantor.
Manage Current Debt
When applying for a home loan, making sure that you make regular payments on your personal credit cards and personal loans are essential. You also want to make sure to minimize any overdrawn periods on cards as the lender will generally take a look at your last six months of statements.
Also, the majority of people don’t max out their cards. Meaning if you fall into this category, it may be a good idea to lower your credit card limit as it will lower your potential debt obligations. In the case that you’re the primary cardholder, you can simply call your card provider. Likewise, if you don’t even use the card at all, you can cancel it completely. But be sure to get a letter of confirmation from the crediting institution. Finally, if you have personal loans, consider consolidating them into one if you have multiple or even into your potential home loan.