Economists have noticed a rise in the number of home loans and JP Morgan’s Tom Kennedy is encouraged by the recent 5.8 per cent boost. However, the Australian Bureau of Statistics has concluded that not much has changed since December 2013, when there were 51,045 approvals. A month later, only nine authorizations had been granted.
While the Greater Building Society offers trips to Fiji, Los Angeles or different cruises depending on the type of loan, the greatest concern is that new loan applicants are not aware of the complications and formalities that need attention. According to a News Corp report, before receiving free holidays, home loan hunters must become eligible to purchase a house. However, the road to a successful application can be hindered by small mistakes such as poor credit score, other debts etc.
Being granted a home loan will just remain a far-fetched dream if you do not respect the lender’s deposit requirements. MyRate spokesman Kevin Sherman stated that nowadays, lenders take precautionary measures by demanding more from the borrower.
In order to avoid rejection, one of the most important things the borrower needs to do before applying for the loan is ask about the exact deposit required.
Precarious Credit History
Irrespective of your financial situation [income], the lender may still say “No” to offering you a home loan. The answer lies in the credit history, which could affect the lender’s decision. If you have not paid your debts or if you are late with your payments, you could easily face a loan rejection. At the same time, you should not stay too close to the card’s credit limit and you should have a low percentage of unsecured [personal] loans.
The best way to avoid a home loan rejection is to keep a check on credit repayments and bills in order to demonstrate that you are a reliable person who successfully manages his or her finances.
Lenders do not appreciate people who move too much, because it could be perceived as a sign of instability or financial difficulty. As a result, a history of regular address change could go hand in hand with a home loan rejection.
However, if the borrower’s employment history has caused the residential changes, he or she can set the record straight. It is important to ask the lender beforehand about the minimum requirements regarding residential and employment histories.
Also, remember that if you are living under the same roof as a person who has credit card dues or did not pay his or her loan, the address will appear in the database. In this case, rejection is a probable outcome.
Lenders put great price on stability, especially when it comes to employment history. As a result, being a job hopper can affect the home loan application. Lenders usually believe that stable employment is an indication that the borrower can meet the monthly commitments.
However, offering sound arguments regarding the gaps in employment history and job changes could determine the lenders to consider your application. If you are employed by the same company for six months or more, you can apply for a loan.
According to Sherman, another problem that could arise when applying for a home loan is “unsuitable” property. It is important to grasp that not all residential properties are suitable security for such loans. Most lenders prefer in demand, easy-to-sell properties…
Excerpted from an article originally published in issue 3 of Property Inc. magazine.