If you are thinking about purchasing your first property, the chances are that you will need to borrow some funds. Applying for a mortgage and getting approved isn’t only a complicated process but it can also turn out to be quite lengthy. As soon as you start inquiring what documents you need to provide the lender with, you might feel overwhelmed.
At the same time, there are some things that you should do to improve your chances of getting a mortgage. In order to facilitate this process, firstly, we are going to give you some tips on improving the odds of being approved, and then we are going to introduce you to a document many lenders will require you to have – proof of deposit.
Start with the credit score
The first thing that you have to do is to check your credit score. As you can assume, this is the initial thing that a lender will be interested in, and it is something that can make or break the deal. Naturally, the higher credit score is the better deal you will get i.e. the lowest mortgage rates. This is also the information that lenders use to determine whether you will be able to pay off the debt.
If your credit score isn’t where you want it to be, it might be a good idea to take more time and work on improving it. By doing this, you will not only increase the chances of being approved, but you will also avoid any surprises that can result in additional unexpected expenses.
Organize your finances
What do we mean by this? Well, first of all, you should work on paying off any current debts that you have. This will greatly boost the overall appearance of your finances. If this is not possible, then you should work on decreasing the amount of money you owe. As it is to be expected, if you are in substantial debt, the lender will be reluctant whether or not you should get the funds.
Similarly, you should close all the accounts that you don’t use anymore. You have to ensure that your finances are transparent as much as possible because you want to show the company that you are trustworthy i.e. that you will be able to meet all the regular payments. Another thing, you should try to avoid changing jobs while going through this process. Having secure employment is one of the most essential requirements that you have to meet.
When it comes to buying a property, a lot of people get carried away. They start looking at houses or apartments that are way above their budget, thinking that they could still afford it since they will apply for a mortgage. Yes, it may seem that way, but it usually isn’t the case.
Even though you will get a large sum of money, you still have to determine what that amount is going to be. Some people don’t want to spend the next 30 or 40 years of their life paying off this debt. Due to this reason, you should firstly consider the sum and then inquire about the monthly payments. Obviously, there are multiple factors that can affect these, but you should at least try to calculate how much money you can afford each month. Surely you have other expenses such as rent, food, entertainment, and so on, so doing a thorough analysis of your monthly fees is crucial.
Obtain proof of deposit
In some countries, people are required by the law to acquire and send this document to the lender. This means that the first thing that you should ask the potential partner is whether this law applies to your state. Keep in mind that if their answer is affirmative, this is a step that you cannot skip because if you don’t have this document, your application will be denied immediately.
There is another thing that you should know – there are numerous sources of proof of deposit, and lenders do not accept of all them. Naturally, this is another thing that you should inquire about. For example, a lot of people opt for funding the mortgage from their savings account, so all they need is a bank statement showing their balance. On the other note, some people want to use the money they have inherited, so they need to get the document from the executor of the will alongside bank statements.
Moreover, there are some sources of the deposit that not all lenders will accept. Even though gambling winning is an excellent proof of your ability to pay off the debt, some lenders will be hesitant simply because of the nature of the source. In addition, there are many details that you should know about this document, so our advice is to locate and read this guide and acquire as much information as possible.
Save money for the down payment
As you know, when it comes to purchasing a property, you will have to put some money upfront. In order to get the best deal possible, our advice is to save as much money as you can. There are two reasons. Firstly, the larger the down payment is the lesser amount of money you will need to borrow. Secondly, this payment is also going to affect your interest rates, which is another beneficial reason.
Yes, we know, this is easier said than done, however, you have to understand how essential it is. Not only will you improve the odds of actually getting the mortgage, but at the same time, you will lower the funds you will have to pay back in the future.
Find the right company
A common mistake that many people make is to accept the first offer they get from the company. A lot of them don’t understand how different terms between companies can be. Because of this, it is of crucial importance to talk with few companies to find the one that can provide you with the best deal. You should inquire about the things that we have previously mentioned, and ask them for their quotes. What’s more, when it comes to these, you should try to get them all on the same day. The market changes quite quickly, and this is the best way to ensure that you will get accurate information.