Points to Consider when applying for a Property Mortgage Loan

Planning to buy a new home? If the answer is yes, make sure you are aware of mortgage requirements and terminologies because you may have a lot of questions to ask. Making a well-informed decision will help you save time as well as money.

It can be an intimidating task to complete a mortgage application, especially if you are not certain about what information you will be needing. First, you need to get familiar with the process of applying for a mortgage loan.

Here are few factors that banks or ending institutions consider when approving or rejecting a property mortgage loan:

1. Credit report is the first and most important thing that lenders consider. It is recommended to obtain your credit report and see if it is in a good shape. Get it updated because there are chances few minor errors are hurting your credit rating. Having a good credit rating will help you get the loan at a good rate. If there is incorrect information on the report, it will affect your chances of getting the loan altogether. So, get discrepancies corrected before approaching a lender.
2. Next factor that you need to be careful about is your credit standing. It is advisable to have low credit card balances or pay them off before approaching a lender. Also, if you have any other outstanding bill, pay it off as soon as possible.
3. Your credit account amount can also make or mar your chances of getting the loan at good rates. According to experts, it is not advisable to close current account or apply for a new account when you apply for a mortgage loan. This activity might make the lender suspicious, bringing down your chances of getting a good rate.
4. If you are able to pay more money upfront as down payment, it will be beneficial for you. High down payments can get your loan approved quickly and also result in a lower loan. However, even if you can’t pay a large amount as down payment, your good credit history will get you a loan at a good rate.

5. You can get a home loan or home loan against property at attractive interest rate if you have a good job or a steady source of income. Lenders consider this factor when approving or rejecting a loan application. Look for a steady job, preferably with a good income if you wish to buy a house. Also, don’t switch too many jobs or don’t quit your job before submitting a mortgage application.

Interest rates don’t affect the chances of loan denial or approval. They help in determining monthly payments. Remember, interest rates keep fluctuating and can change while your loan application is being reviewed by the bank. If you feel that the rate might increase, you can pay a "lock-in" fee that will guarantee you a loan at a favorable rate of interest so, keep this factor in mind.

Petson is a banker and a blogger. He also writes articles on how to get your application for a property mortgage loan or a home loan against property approved by a lender.