Planning to buy your dream home also means the time is perfect for tracking the best interest rates and the best lenders as quickly as possible. Along comes the hassle of getting your loans approved. But do not worry. Even while the whole endeavor seems stressful, an organized financials and a few mortgaging tips can ensure that your loans are approved without hassles. In this article, Top Ontario Mortgage Broker lays down five perfect sets of advice to get your loans approved quickly. Also, read more here to grasp the true essence of the prevailing situation; and why brokers are advising buyers to consider fixed rates over variable rates.
Five factors imperative for an easy loan approval
Your credit scores speak a lot: Make yourself financially healthy
Canadians have their credit scores split into five different categories. The scores from 300 to 900 are categorized with poor in the lowest to excellent the highest score. Lenders typically gauge a potential borrower with their credit score. The credit score comprises a borrower’s numerical score, late payment reports, opened accounts, credit history length, and the overall debt. A person is rewarded with a high credit score if he makes on-time bill payment and restrains from using much of the available credits. A credit score of 660 and above is considered an ideal credit score that makes one eligible for easy loan approvals.
Want to know your credit score? You can now check your credit scores with online companies that pull information from TransUnion or Equifax. Once you have registered with online companies, ensure that you check your score in each quarter.
The bigger the down payments, the easier the approval
Invest in homes that enable down payment. Experts advise the buyers to make bigger down payments to reduce the amount to be borrowed. It is also found that the less the amount requested for borrowing, the higher the chances of approval. Following are there different categories of the home process that requires minimum down payments as follows:
- For homes under $500,000, the minimum down payment is 5% of the final price.
- For prices between $500,000 and $999,999, the down payment is 5% for first $500,000 and 10% for the prices above $500,000.
- For prices above $1 million and above, the down payment is 20% of the actual price.
Keeping your income stable
Mortgage providers approve loans only if the borrowers submit proof of full-time job. The long term employment with an employer also adds to a borrower’s credibility, increasing the chances of faster approvals. Similarly, for people requesting joint loans, it is a must that both partners are employed.
However, loan approvals for self-employed can be challenging, as they need to provide detail about their income and prove that they are reliable clients. Experienced mortgage brokers best deal with these cases.
Clear all your existing debts
Existing debts can be too taxing for borrowers as they would need to serve different debts altogether. Besides adding to debts, lenders tend to evaluate a borrower’s debt to income ratio to confirm the approval. Low debts are beneficial for a good credit score as well.
Borrow what you can afford
While mortgage lenders consider every financial info about a borrower before approving loans, experts also recommend borrowers set achievable expectations before requesting loans. This may include considering their current income and lifestyle needs.