If a bad credit rating is making it very difficult for you to get a home loan, it doesn’t mean you need to shelve your homeownership dreams. Credit history can be affected by several factors or in several ways including missing payments and late payments. You need to take a look at these Five Tips For a Home Mortgage Application With Issues. It could be affecting your home loan application.
Get Your Credit Report Under Control
first step is knowing exactly what’s in your credit report so you can plan to
sort things out. You can request a copy of your credit report by contacting
a credit reporting agency.
While any overdue credit debts stay on your credit file for five years, if you pay out the balance of your debt, your credit file can be updated. It’s vital that you do as much as possible to clear any outstanding debt as lenders will want to see what actions you’ve taken to address any credit issues.
If the information in your file is not accurate, you can request to have it corrected by contacting the credit reporting agency and the credit provider involved.
Each lender has its own particular set of rules or criteria for approving home loan applications so it’s worthwhile shopping around if at first, you get a no. Remember though, that too many applications in a short timeframe can negatively impact your credit report if you’re being turned down for each application.
Working with a mortgage adviser will help you avoid adversely affecting your credit report as we work with a panel of lenders who deal specifically in lending to borrowers with credit issues and can match you up with the right one so that you can avoid being declined.
Consider A Non-Bank Lender – Five Tips For a Home Mortgage Application With Issues
Banks have strict home loan assessment rules derived, this may be holding you back from getting a mortgage with credit issues. Alternative lending solutions from non-bank lenders may offer a more flexible and satisfying lending product that could better suit your circumstances.
These lenders tend to take an alternative approach to mortgage applications, considering each application on its merits and looking at a much wider set of lending criteria, which means they can often provide a financial solution when the banks turn you down.
Ensure You Can Afford The Repayments
Check you are in a position to comfortably manage your mortgage repayments without defaulting. You can use an online mortgage repayment calculator to determine how much you’ll be required to repay each fortnight or month. Then draft a budget factoring in all of your monthly incomings and outgoings. Be sure to include a bit of a buffer for any interest rate increases so that your repayments are not too big a stretch for you.
Look At Alternatives To Lenders Mortgage Insurance (LMI)
One of the biggest hurdles for homebuyers with less than a 20 percent deposit is Lenders Mortgage Insurance (LMI). This is the fee charged by lenders to cover them should you default on your loan repayments later on.
LMI providers are separate business companies or agency and they have their own lending rules. So it is possible they’ll consider any application as carefully as the main lender. They may turn down an LMI application because of credit history or income source, even when a lender has given approval.
To get around this, rather than using a third-party mortgage insurer, some lenders can offer a Lender Protection Fee (LPF) which gives them the flexibility to assess your loan without having to get outside approval from LMI providers. Getting a mortgage with credit issues shouldn’t be impossible for you.