Securing a mortgage will usually be a big milestone in your life. This can allow you to own your dream home and can help you move on from rent draining your income. However, bad credit history can lead to a bank rejecting your request. Below, we explore some of the main considerations you should have when applying for a home mortgage.
Why do banks reject borrowers?
There are plenty of reasons why banks might reject borrowers. One of the main reasons is poor credit history: banks might not be confident lending to you if you’ve struggled with repayments before. Similarly, if you have multiple credit applications of late, you might be rejected too. You might also be rejected by a bank if you’re not registered to vote, are in too much debt, have used payday loans in the past or if you don’t earn enough for the amount you want to borrow. Given these hurdles you’ll need to overcome, it’s important that you plan carefully before borrowing.
Five factors to consider
Check your credit report in advance
For a start, you should check your credit report in advance to see your current situation. If your credit score is poor, you might need to spend some time building your credit score. You can improve your score by paying debts promptly and efficiently using a credit card.
How big is the deposit?
For a start, you should consider how large your deposit will be. The most important aspect of this is that you’ll need to be able to afford it. There’s no point in applying for a mortgage if you can’t afford the deposit. What’s more, the size of your deposit will help determine your choice of mortgage options.
Are the repayments affordable?
You should also consider whether your mortgage repayments are affordable. You don’t want to end up in a nightmare situation where you can’t afford your mortgage. As such, you should create a budget for the future and see if you can afford the repayment rate offered.
Seeking extra finance in case of rejection
If you’re rejected for your mortgage, you might consider seeking extra finance to help you with an application. By exploring secured loans, you can find a product that can help you secure the finance you need for your mortgage. Bad credit history can make the process of securing a mortgage feel overwhelming. But there are ways to navigate this situation. By building your credit score and by considering the factors above, you should be in a strong position to successfully apply for the mortgage for your dream