What improves your chance of a home loan
We all want to have our own homes. We love the idea of having a space we can call our own. We all want the freedom of not worrying about other people’s rules about the right paint colour or new flooring. But getting that freedom is not easy.
One key way is to get a home loan, providing us with the finances to secure our independence. With that in mind, these are ways we can improve our chances of getting a home loan in 2016.
Be secure
A common mistake potential buyers make is assuming their current financial status is the best way to judge their ability to qualify for a particular home loan. While lenders look at your current status, what often matters to lenders is knowing how well you’ve managed your finances over time.
Ewald Kellerman, head of sales at FNB Home Loans, told Property24 it’s better for an applicant to have a long-term relationship with the lender. He indicated that if lenders know the applicant, it is easier to assess the full extent of the applicant’s income and the expenses pertaining to the investment property.
While a long-term relationship doesn’t guarantee a loan, it speaks to your consistency. Given the complicated nature of how loans are assessed, if lenders can see you are not a risk, this will aid you a great deal in securing a home loan.
Consider your career
Self-employed people have a harder time getting a loan than the people they employ. This might sound shocking until you realise employees often are the ones with set salaries. This puts them in a far more secure bracket, even if there’s an ongoing chance of them losing a job. If a lender can see you are in a stable position in terms of regular income, this provides them with assurance you will have the funds necessary to pay back the loan consistently.
Meanwhile, self-employed people are a known high-risk, according to experts. This might mean if you’re self-employed, you might have to rely on your salaried partner to be the main applicant for a home loan. You could easily split the funds, even if it comes out of their bank account. Instead of paying the lender, self-employed people can pay their partner and help secure consistent loan repayment.
Always calculate
Everything about finances is about proper calculations. The more information you have the better. Before you even apply for an actual home loan, use various free tools to get a sense of your current financial situation. For example, use home loan calculators to see what you could qualify for.
You should also speak directly to experts, with details about your current financial situation, to get a general overview. This means you know what you must work toward in future.
By using these tips, you should be able to improve your chances of securing a home loan and your freedom.