Being able to take out a mortgage has become a major hassle for all types of home buyers, but especially first time buyers. Recently, a 2018 study by the Central Bank reported that the best position to be in so that your request for a loan can be approved by one of the 7 largest lending banks is in a couple with a substantial down payment already available.
This is most likely the case because a couple can bring in two salaries, making a steady stream of income more reliable even if one person were to lose their job. Additionally, having a large down payment reduces risk for the lender. If you were to foreclose on a property, meaning you couldn’t afford to pay your mortgage anymore, there would be significantly less consequences on the lender side.
Although this is an ideal situation for approval, it is not the only solution. Plenty of first time buyers are individuals without extremely high credit scores and salaries, but there are a few key parts that must be fulfilled in order to even make you eligible.
Some of the most common things banks look for when going through a mortgage application is proof of a steady income, evidence that you are able to afford a hefty monthly bill (such as stable savings accounts record), a good credit score, and a solid down payment ready to go.
Once you have all of these elements, you can begin looking into properties in your budget based on your maximum mortgage limit. This maximum anyone is able to get is 3.5 times larger than your annual gross income, although you do not have to borrow up to the maximum if you are not interested.
Deposits are also necessary when purchasing a home. First time home buyers are required to pay a deposit of 10% of the homes purchase price, while second time buyers pay 20%. This percentage is not restricted though, especially when you are able to pay off more of the property in the very beginning of the loan term.
There are so many elements that go into being a quality applicant that will bring in the bank a profit as opposed to a loss. By making sure to continue or start making smart decisions about your finances now, you will get what you think you deserve out of a government mortgage loan.