It’s a difficult situation when your application for a mortgage is rejected. Sometimes the more significant source of your concern isn’t that it was denied; rather, it may be that you don’t know what measures to do next to get your mortgage application accepted.
When applying for a mortgage, here are three mistakes that many people make (along with advice on how to avoid them):
- Non-disclosure
- Incorrect financial institution – Earnings that are not covered by the bank’s rules
- Safety and the structure of the property itself
Non-disclosure
This is one of the most significant factors that leads to the denial or postponement of mortgage applications. You have an obligation to provide as much information as you can regarding your current financial situation. There are four primary categories to take into consideration: assets, obligations, income, and expenses. Although this occurs very infrequently, there have been a few instances in which individuals have had their approval revoked by the financial institutions to whom they had applied because they omitted to disclose the fact that they were pregnant at the time of the application and then went on maternity leave shortly before the settlement took place.
How can you prevent making the same mistake again?
Invest additional time at the beginning to ensure that your information is accurate.
Your liabilities and your expenses are two aspects of your business that require special attention from you.
Personal loans, “buy now pay later” contracts, mortgages, and credit card debt all fall under the category of liabilities. Your application as a whole, as well as the likelihood of your being accepted, will be affected by all of these factors. It is essential to ensure that your terms, interest rates, and credit limitations are accurate.
Expenses: Everything that is going out on a consistent basis ought to be disclosed. These include insurance premiums, the cost of child care, subscription fees, charitable contributions and tithes, as well as investments and savings. Your ability to borrow is directly impacted by all of these factors. Your capability for borrowing money will be reduced (surprise!) if you don’t disclose these things at the beginning of the process and the bank discovers them later on as expenses. However, you need to let the bank know if any of those expenditures are likely to be eliminated in the near future, as this will result in an increase in your ability to borrow money.
A bonus piece of advice: communicate openly and honestly with your mortgage adviser about the state of your future finances. Inform them, for instance, if you intend to have a child, if you intend to change occupations, or if you intend to change the hours that you work. Your adviser will be in a better position to make a decision on how to submit your application to the bank the more information they have at their disposal.
The incorrect financial institution, or making use of income that is contrary to their policies
Your application for a mortgage may have been denied due to your inconsistent and fluctuating income. This may have been the case. At each of the major banks, different priorities are placed on aspects such as commision, overtime, and bonuses. For instance, a bank may accept commision for a period of six months but may only put 80% of that commision towards increasing their ability to service customers. However, a different bank might consider a two-year average, and if they do, they might take one hundred percent of the income. Because there is some room for interpretation, differences in business income are expected to be the most significant. The usual bank policy will wish to use the average of two years’ worth of financial statements, but there are scenarios in which the bank will use only one year’s worth of financial statements, and there are other situations in which they might contemplate using a forecast instead. When you combine this factor with the various levels of expertise held by bank employees, you run the risk of obtaining outcomes that are highly variable.
How can you prevent making the same mistake again?
Find out which bank will be the most beneficial for your current income situation. There are some banks that will take a more favourable view of your revenue, and as a result, you’ll be able to put a greater portion of that money towards your capacity to borrow. You always have the option to ask the bank how they evaluate commision income, as well as what percentage of that money they will factor into the calculation for the cost of servicing the loan. Having a mortgage adviser, who has access to all of the relevant banking policy manuals, would undoubtedly make this process simpler.
The structure on the property
Your application for a mortgage may have been denied for a number of reasons, the third of which might be the property itself. The majority of the time, financial institutions choose to invest in real estate that can be swiftly and readily resold in the market. Homes that have excessive moisture readings, homes that have work done on them without the owner’s authorisation, and older homes that are not in a liveable state are the three categories of properties that are most likely to be refused.
How can you prevent making the same mistake again?
Collect all of the pertinent reports in advance, and then deliver them to the bank. These reports include those from the builders, reports on the moisture readings, and recommendations from the builders for what needs to be changed and how much it will cost to remedy it. This will not only instill greater confidence in the bank, but it will also provide you with a good indication of how much money will be required to get the house up to a satisfactory level.
About Best Mortgages:
Tauranga’s Best Mortgages has been a trusted mortgage broker for 15 years and have helped hundreds of families reach their property goals. Our name says it all—we find the greatest mortgage solutions for our clients. We offer refinance, first home buyer, refinance, and investment property loans. We proudly serve clients across New Zealand.
Best Mortgages understands that buying a home is a major financial decision that demands careful consideration. We listen to our clients and comprehend their financial situations. We can then provide them the best financial solutions to help them become homeowners.
Our skilled mortgage brokers shop around for the best lending product for our clients. We strive to make lending easy. To ensure a stress-free experience, we guide our clients throughout.
Best Mortgages can assist first-time homebuyers and seasoned investors accomplish their property ambitions. Discuss your home lending needs with us today to find the best mortgage for your situation. As a Best Mortgage broker, we assist you locate the right mortgage for your needs.
Give the Best Mortgage brokers a call today on 021 449 177.
.
