Five Steps toward Securing a Cheap Home Loan

Many consumers never realise that their past and current financial conditions can play a large part toward securing a cheap home loan. Here are six simple steps to consider and follow toward guiding any prospective borrower to secure a cheap home loan:

1)      Limit Borrowing

Planning successfully can help a consumer obtain a cheap home loan by not taking out any other ones prior to your search for a mortgage. This includes refraining from borrowing for an auto or other personal need when you realise you will soon be in the market for a housing loan. If paying on a specific auto or personal loan, consider paying these off before applying for a cheap home loan. Also, manage your credit card payments by keeping all minimum payments current. In fact, repaying greater than a monthly minimum is a good practice leading up to a time when seeking a cheap home loan. The goal is to refrain from being overly debt burdened when the time comes to secure a cheap home loan. Presence of a large amount of debt tends to weigh heavily when lenders decide what interest to assign to your loan request.

2)      Practice conservative banking activity six months prior to applying for a cheap home loan. Refrain from making a lot of deposits and withdrawals that lending institutions may require an explanation.  Also, refrain from making any large purchases, taking any expensive vacations or other major spending anomalies that could throw a red flag warning to the finance company. Maintaining a steady balance in your account with the required 15 to 20 percent down payment will show a potential lender you have been carefully planning for a home purchase before seeking a cheap home loan.

3)      Always make sure to declare all “other” income you receive whether passive or active. Passive income may be derived from rental properties or other income producing investments. Active income is that derived from any “activity” performed for compensation other than your normal salary from your full time job. If your part time employment activity is historically recurring, for example a teacher who also consistently makes money conducting after-school tutoring, then this has a positive impact when examined by lending institutions. Although any passive non-recurring income including interest income or capital gains will not have any loan-granting, decision-making impact, possession of securities, fixed deposits, LIC policies, etc. will secure your credibility as a “good-risk” borrower.

4)      Maintain a steady job prior to seeking a cheap home loan. Several job changes leading up to the time when seeking a cheap home loan will not add to your chances. Furthermore, switching from a steady pay check producing job to self employment may require a prospective borrower a greater amount of time spent as an entrepreneur to produce record detailing your individual profit success before a loan can be granted.

5)      Be prepared to have a co-applicant available in order to secure the best cheap home loan possible. This may be a requirement in the event a large amount loan is sought. You co-applicant needs to have stellar credit as well along with income requirements needed to make the necessary repayments for a loan of a considerable large amount.

Typically, when self employment has been for a short time, a loan guarantor may be required.

My Choice Finance is a Mortgage Broker providing cheap home loan at a very competitive rate. Whether you are an investor looking for investment loan or first home buyer, you should speak with our mortgage broker first for obligation free advice and let us do the hard work for you.

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