Talking to a mortgage broker or bank/lender can be a big deal. Don´t go around talking to everyone without having a plan. If you say the wrong things to the wrong people, you might find your credit score down in the dumps and a loan much, much harder to get (and a lot worse terms!). Be prepared for what the lenders will ask you, so you can make sure you give them the answers they’re looking for and don’t set off any alarm bells.
Your Residential History
To access your responsibility, history of repayments, etc. the lender will want to know how you’re living currently; where you live, how long you’ve lived there, if you’re renting or buying, how much you’re paying, or if you´ve been late on repayments. It helps if you´ve built up some history here, but try to smooth over any problems that can arise in this area. If you´ve been responsible and paid everything on time, you’ll be fine. Lenders are far more likely to be lenient if you have slightly shorter track record in paying for rent or repayments than if you´ve missed payments.
How long have you been at your current job, what industry you’re in, what´s your income, do you have other revenue streams. This is an important section, as they’ll want to make sure you´ll be able to make the repayments for the life of the loan. Again, a good employment history will do wonders here, but it´s a lot more forgiving than if you have a bad residential history. You´ll need documentation to back this up, and they will ask and triple check your information, so don’t try to fudge anything.
Credit card scores and health is very important, too. How in check you are with your finances will decide whether a lender will want to give you the biggest loan of your personal life. If you have no previous credit history, consider getting a credit card for a year and pay it off regularly to start building up a credit score. Something easy to do in advance if you’re planning for the future, and a big positive tick next to your name.
Current Financial Obligations
Do you have outstanding student debt? Car loans? These are the things lenders will want to know so they can paint a complete financial picture about the state of your finances. A lot of this will appear on your credit report, so try to be as forthright as you can. Lenders will want to give you a loan, but will try to stop you loaning past your means. Give them all the information you can about what´s coming out of your paycheck before the mortgage repayments can even be met.
Your Savings and Assets
If the bank has some securities with the assets that you have already, or the fact that you´ve been able to budget and save, they’ll feel a lot more confident that you’re going to be able to meet the financial demands of mortgage repayments month on month for the next 20 to 30 years. You don’t need a massive number, but lenders will love to see if you have enough assets or cash to cover the down payment and any closure fees plus a few months of repayments in reserve.
So be ready to answer all of these questions, because the lenders will be armed with your credit history and will know a lot more about you than you realise. Asking for a home loan is something you only want to do once. If you get the interview wrong, other lenders might shut the door on you just because of the negative impact of a failed loan from another lender. Be ready to answer any queries they have on what might stop you from paying a loan. Mortgage brokers can help you get everything on track before you go to the lenders, and know what they want to hear and how to portray any potential bad news, if you want to avoid potential heartbreak and a lot of hassle.