Tips to follow before applying for a home loan
Applying for a home loan can be an overwhelming task if you haven’t been through the process before. While you can obtain assistance from your real estate agent, it’s important to have an understanding of what financial institutes are looking for when you apply for a loan.
Check your credit score
A low credit score will make it difficult for you to obtain a home loan. Your rating gives banks insight into how well you’ve managed your money in the past, and this is an opportunity for banks to check if you have a history of settling your bills on time.
This information is useful in determining whether you will make your home loan repayments promptly.
It’s advisable to check your credit score prior to putting in applications for a home loan. Understanding how your credit score is worked out will help to ensure that you maintain a good rating.
Check the property evaluation
The property evaluation influences whether the bank will approve your home loan or not. The purchase price should not exceed the property’s value by a large amount.
The property also needs to be well-maintained to pass the evaluation.
Check whether you’ll be able to afford the home loan
Before you decide to buy property, you’ll need to calculate whether you can afford it or not. Work out your monthly expenses and deduct this amount from your salary.
You should have enough money left over to pay your home loan instalments after you’ve settled your bills.
Having an understanding of your financial situation will enable you to determine the amount that you can afford to spend on a house.
If you stay within your budget, it’s more likely that a bank will give you a loan. Another option is to apply for a joint bond with your spouse.
Avoid making extra debt
When you’re applying for home loans, it’s important to ensure that your finances are in order.
Start to pay off any debts before you buy property and make sure that you repay your debts on-time in order to avoid accumulating new debts.
Have a stable monthly income
You’ll need to prove to the bank that you have a stable monthly income before they approve your loan.
Regular income is an important aspect that’s taken into account when financial institutes are assessing your edibility for a loan.
You’ll need to give the bank your latest payslip as well as three months bank statements when you put in your application.
Save for a deposit
A deposit increases your chances of securing a home loan. Start saving in advance so when you decide to buy property, you have enough money saved up for a deposit.
While some financial institutes offer loans for the entire purchase amount, putting a deposit down shows that you have the ability to save.
When you have savings that you can use as a deposit, it is an indication that you are managing your finances well.
Be transparent and declare all your expenses
Providing incorrect information about your expenses can jeopardise your chances of being approved for a loan.
Make sure that you don’t duplicate your expenses when you declare them to the bank. Provide the documents you’re asked for and make sure that you’re honest about all the information that you provide.
Any inconsistencies will jeopardise your application. Don’t assume that the bank will only asses the documents that you submit as they may use other sources to support the information that you provide.
Now that you have a better understanding of home loans, you can increase your chances of getting assistance from the bank. If you’re still looking for your new home, visit GotProperty today!