Taking major leaps in life such as buying a new home is overwhelming. The first thing that strikes one’s mind is how to arrange finances. Well, irrespective of what phase of your personal and professional life it is, initiating anything new does call for some money. And, one of the best ways I see to elevate the stress here is to fund your requirements.
By applying for a residential mortgage, you can fulfil the desire to live in your dream property whilst its ownership remains with the lending institution. However, getting approved for one may not come easy. Some factors can affect your application status and your eligibility overall. If you are keen to know about them, keep reading further.
Mortgage brokers and lenders look at the borrower’s age first. They do that to ensure that you are not close to your retirement time anytime soon and have the ability and money arrangements in the backend to repay the debt. People that are in the early years of their career tend to get easy sanctions and the retired population is left disappointed by their rejected applications. But, this is usually the case with long-term loans. Short-duration mortgages can be approved with higher EMIs.
- Income and Job Status
Unconventional and contractual jobs don’t offer the level of security as full-time and permanent jobs do; which is why you can see people holding high ranks in a company getting easy loan approvals. The flow of income also matters here. With an inconsistent earning, you can never prove your worth to the lenders and your capability of returning the loan amount on time is. The impressions are more negative with frequent changes in the job.
- Credit History
Now, this is something that most of you are aware of already. During the assessment of your loan application, lenders extract your entire credit history. Unfortunately, if it shows any pending bills, defaulted payments, bounced cheques, or unfulfilled EMIs, the chances of your rejection increases drastically. So, make sure you maintain a good credit score by clearing credit card payments and other debts on time.
- Number of Dependents
While filling the mortgage application, lending institutions ask for details of your spouse, children, or parents just to assess the financial responsibility you already carry. Having more number of dependents means you have lower disposable income in hand and hence, the lesser capacity to pay back the loan. But, this condition can rule out if you have a consistent or fixed source of money. Otherwise, your home loan eligibility can be affected.
- Record of Previous Loans
If you think that you defaulted for a loan in the past and nobody has the information about your rejection, you are probably not thinking in the right direction. Financial Institutions and credit intermediaries usually keep a record of all the applications that have been rejected till date. And in case, yours was one of them, your chances of qualifying for the loan are hampered.