When you comes to buying a house, you have to apply the mortgage loan with the bank. You might heard someone said applying a mortgage loan is the most difficult thing to do as its process is differs from getting a car loan, and those applicants who do not know these major differences are always disappointed when their mortgage loan application is being rejected by loan officers.
Hence, before you applying the mortgage loan, you have to education yourself how to turn that rejection into an approval and try to think like a lender. Here are 5 tips on how to increase your chances of getting the deal you want;
1.Know Your Credit Score
Surprisingly, most of the home buyers are never review their credit scores and credit history before hand-over their mortgage loan application, and thought their credit scores are high enough to qualify. Besides, many of them are never think over the possibility of failure.
Credit scores and credit activity have a major impact on mortgage approvals. Generally, the credit score takes into account a personal payment history (45%), amount of debt (35%), and length of credit history (20%). Hence, personal payment history is the main factor that can affect your credit score. Below are the factors which can reduce your personal credit score;
- Being a bad paymaster – you never pay your bills on time (credit card, phone bill, PTPTN loan etc)
- Defaulting on a loan – you are inability to settle your car installment, credit card or being a cosigner for other loan
- Sharing financial relationships – should you share the utilities bills with your housemate or you are taken up a loan on behalf of your family
- Empty credit history – don’t think that if you do not own any credit card or taken up any loan means that your credit score is higher. Oppositely, your credit rating is as terrible as the poor one because you are a blank page for the credit rating agencies
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2. Save For Down Payment
It is important for you to save for down payment which can range from 2.25% to 20% of the purchase price of the house that you interested. If you apply a mortgage loan with zero cash, it can increase the chances that bank’s officer rejected your mortgage loan application. On the other hand, if you won’t be able to come up a large down payment, then you should look for is there any ways you can waived the down payment (e.g., MyDeposit Scheme – only applicable for first-time home buyer) or you may switching the house type which can helps you to make a small down payment.
3. Compare The Lenders Offer
Every mortgages are not the same, a fixed-rate mortgage is not suitable for every home buyer as well. Its important to understand the offers from difference banks. If the first lender offer you the high interest rates, there’s no reasons not to compare to other options and you should search for the interest rates that suit your financial situation.
4. Know What You Can Afford
Before you searching for the house you wanted, please do get a mortgage pre-approval first. Lenders would determine pre-approval amounts that based on your income and credit report. This can helps you to know how much money you are qualify to borrow for purchase a home. Once its successful, you will have a practical expectation of which house type fall within your budget.
5. Research various loan options
Every bank has offer difference loan options, maybe you heard some banks offer fixed-rate loan and adjustable-rate loan. For example, should you plan to stay in a home to build a family, you may consider a 30-year loan. Alternatively, if you are moving in 10 years or less, and adjustable-rate-mortgage could better suitable to you. Certainly, it must be according to every home buyers financial situation and it is very important to understand which loan type is suits your needs.
Conclusion
To go from rejected to pre-approval until officially approved, it is important for you to understand what lenders are looking for in every applicant. If you are not qualify for a mortgage loan, don’t get disappointing. Instead, concentrate on how to improve your credit and finances and with time, you will be able to turn the situation and become a property owner.
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