12 Ways to Increase Chances of Mortgage Approval
For many the process of waiting for mortgage approval on an investment property can be a nerve-wracking experience – after all there is so much on the line if the funds aren’t forthcoming. In many ways it reminds you of waiting for exam results during high school when you check the mailbox each day with a mixture of excitement and trepidation.
Much like your old school exams the better you prepare yourself the greater your chance of getting the result you want. In this article we’re going to suggest 12 ways you can increase your chances of getting that mortgage approved.
- Get your paperwork together. Any mortgage lender is going to require documentation and the degree to which you get this organised in an orderly fashion will impact on the success of your application. The simpler you make the lenders job the better your chances of approval.
- Complete the application form correctly. This may seem self-explanatory but incorrect paperwork or leaving information incomplete can have an impact on your acceptance. Again the lender doesn’t want to go hunting for data or coming back to you repeatedly for further clarification.
- If you’re rejected try and find out why. Leaping straight back into another application may see the same result if it’s due to a low credit rating or score. If there is a fundamental problem with your situation more applications will only have a negative impact on your credit score. Take the time to check out your rating and correct any errors that might appear on your credit report.
- Live within your means. Your ability to meet your living costs within your income level is a key factor that any lender will consider. They want to be sure your credit situation isn’t going to become extended by additional debt. Hand in hand with this you should consider…
- Putting together a budget. This not only shows you’re organised but that you’re willing to make the sacrifices to meet your objectives and that you can show sound financial judgement.
- Avoid applying for other credit. If you’re looking at financing other purchases now may be a good time to wait. Having a fresh credit request for new car financing may not look as good on your credit report as a clean bill of health.
- Pay your bills on time. A good credit history starts with not having outstanding debt that is overdue. Make sure all your expenses, such as rent, electricity and telephone, are up to date and there are no hidden gremlins that can impact on your chances.
- Manage your available credit. If you have unused existing credit then manage this well. Being at your credit limits can signal you’re overstretched. Having plenty of credit already available may make a lender nervous that you could overextend yourself within the parameters of your existing approvals. Find a happy medium that works for you.
- Separate yourself from former partners. If you’ve been in a relationship or a joint signee, or maybe been involved in a joint venture arrangement before, you may have your rating affected by your former partner’s behavior. Make sure you unlink yourself from any joint accounts you may have held.
- Save a good deposit. Some lenders are willing to lend up to 97% of the value of your property but clearly the more you can contribute and the lower your risk the better your chances of approval will be.
- Consider a guarantor. Having someone such as a parent who is prepared to help shoulder some of the risk can help with your application.
- Hold off changing careers. A recent change of job or start of self-employment may affect how the lender views your income history. If you’re thinking of a career change wait until your property has been purchased.
Like any good baker we like to include 13 in our dozen and our final tip is to make sure you get a mortgage broker to help you with your application. They can foresee and manage many of the potential pitfalls outlined above and save you the time and effort of having to manage these factors yourself. They can be an extra set of eyes to make sure you’ve ticked all the boxes before the application goes in. Check with our team today on how we can increase your chances of getting your next property mortgage approved quickly and easily.