Okay, you want to be a property owner and you don’t have the cash to buy one right now, but you wish to get a mortgage to buy it right? This is a good way to go about owning a house or buying your own home.
Once you have been lent the money, you can purchase the house, the land or whatever landed property you wish to own and then pay back to the mortgage company steadily. However, the problem is mortgage companies are very careful about who they lend their money to.
Some people lie about their income so that mortgage companies might fall for it and lend them the money but in the end, they are unable to pay back in time. This has made mortgage companies super careful about who they lend money to.
This calls for carefulness in the process of application on your part. Silly mistakes from you could cause you to not get the mortgage you are applying for. One mistake could cost you a lot, so you must be aware of the common mistakes to avoid when preparing your application.
Below, we will list and explain six common mistakes people make when applying for a mortgage, and also explain how to avoid these mistakes. Let’s get to them straight away!
1 Putting all your eggs in one basket
This is a situation in which you are applying for just one home deal and you are not shopping or looking around for other better deals. Chris Riley at Right Mortgage UK is one of the best advisors out there that are worth trying.
Their loan-to-value ratio, their home loan features and so on, could be better than the current one you’re sticking to. A mortgage broker could come in useful in picking out a list of quality mortgage plans and then the onus is on you to give a few of them a trial and see what happens.
2 Lying about your income and expenses
Because lenders look at your income and expenses when trying to gauge if you are fit to be loaned, don’t think of trying to remove or add to your true records. It is important, to be honest about it.
They just want to know if you will be capable of paying back. Omitting or being dishonest about your income and expenses is going to tamper with the process of clarification.
Also, lying about your income and expenses could get you into trouble. The lenders could easily file a case against you if you are not careful.
3 Not going through your credit report thoroughly
If your credit score is high, then lenders might not grant you a mortgage loan. They will check if you have any overdue balances that you should have paid off, if you have any missed payments, they will check your credit history and the names of the credit providers who borrowed you and so on.
So, make sure your credit report does not implicate you in any way. Clear all debts and balance all payments.
4 Not having real and tangible savings
Many mortgage banks want their borrowers to have genuine savings. To the banks, your savings say a lot about your financial health. It is a must for all borrowers to have some funds in their savings account so that they can approve their application.
So, start now in advance by saving towards the period of your application. If you have good savings, you have a high likelihood of being approved.
5 Not having a steady income
One of the must-haves to get your mortgage application approved is having a stable source of income. Whether you are self-employed or you’re working under someone, your income must be visibly stable to the mortgage bank.
Also, it is easier for an employed person to get approved than a self-employed person. Why? Because a self-employed person’s income could be all over the place, that is, it fluctuates.
And also, so many self-employed people don’t have proof of income payments since they work for themselves.
6 Putting very little or nothing down
Many lenders require you to put at least 20% down to get the best rates and also you avoid paying mortgage insurance this way. This saves you from having to pay for mortgage insurance in the future.
And if peradventure, you don’t pay up the loan, the mortgage insurer will pay a percentage of the mortgage company’s loss.
So, having listed the above six common mistakes to avoid when applying for a mortgage, we believe that you are now equipped with enough knowledge to craft the perfect mortgage application.
