Do You Qualify for a Home Loan?
Category Advice
Before you go any further, we need to make sure you fully understand what a home loan entails.
The majority of people can't afford to purchase a home upfront with cash, so they approach a home loan provider (generally a bank) who assesses the value of the property you wish to purchase, and then decides whether they will grant you a loan or not. The property is a form of security for your lender and the deed belongs to them until your property is paid off in full, with interest.
Here are the answers to some questions you may have:
What do I need to know before I apply for a home loan?
Have a confident idea of the property value you are asking for. This will depend on the area you want to purchase in, the size, and the quality of the house. Now you can do some research and compare home loan rates between different providers to make sure you are applying with the best suited lenders.
How do I qualify for pre-approval?
The main factor a lender will consider is your loan affordability. This is determined by what your monthly income is compared to what your repayments will be on the property. As a general standard, you will not receive a loan if the repayments are more than 30% of your monthly income.
The other important elements that play a role in acquiring a home loan is your:
- Income stability
- Age
- Debt
- Deposit amount
How can I reduce the total cost of my home loan?
As you will pay monthly interest on your loan amount until it is paid off, the larger the initial deposit that you make is, the less you will pay in total on your property. This is because your actual loan is smaller and will take less time to pay off.
Paying additional amounts into your loan account will also decrease your total repayment of your property. Interest rates increase over time, so the sooner you can pay your property off, the better.
If you aren't sure of what your bond affordability currently is, our online calculator will give you a good idea of what to expect before you start approaching lenders. Use it here! If you need assistance, contact our bond originator directly via avia@saproperty.com.
Author: SApropety.com
