Potential Problems Getting a Mortgage
Don't get caught out
Mortgages. Unless you’ve found a giant bag full of money in your garden, inherited a great deal of wealth from a relative, are considered “independently wealthy” or have just robbed a bank (we certainly don’t suggest that one) the odds are you’re going to need to secure one before you go ahead and close on your new home. However - as it is with any large financial transaction - there are several factors that could potentially crop up on the way to securing your mortgage, or a mortgage in principle, and any one of those could completely derail the process. As a homebuyer, it’s vitally important that you be aware of the pitfalls the could occur when you’re about to get a mortgage. Luckily, that’s just what we’re here to do! In this guide, we’ll identify the most common roadblocks potential homebuyers run into when they’re preparing to get a mortgage - so you can be aware of those dangers before you start the process. Good luck with the buying!
Problem #1: Red Flags on your Financial HistoryOne thing that the bankers are going to check when they look into your financial history is your outstanding debts and amount of credit you can access. If there are significant outstanding debts on your record - and if the amount you can borrow is quite low - that will usually throw up some warning signs for the banks. After all, these aren’t the signs of the financial stability they look for. Do whatever you can to reduce these debts and increase your credit lines before you start the hunt for a new job. Additionally, if you’ve defaulted on a loan at anytime within the last few years, lenders are sure to see that history; if one of those is on your record, there’s a good chance they will deny the application.
Problem #2: Alarming Personal ChangesStability is a key factor for lenders. They don’t want something that can change on a whim - they crave consistency and even-handedness for the people they’re going to lend to. So, that means that any large lifestyle changes in your existence may prove to be damning for your chances at getting a mortgage. Those changes can include:
- Having a child - Bringing a new life into the world may be a miracle, but it also means more and more expenses - which can put a drain on any household’s income. This may seem incredibly unfair but having a child could prove to be harmful to your mortgage chances.
- Getting a new job - Again, regarding stability. This may not raise quite such a commotion as others, but moving from one company to another could raise some concerns among lenders.
- Starting a new line of work - Similar to the last bullet point, but if you’re trading in one career for another - like moving from a corporate job into freelancing, or starting a new business - that potential volatility could have a negative impact on your ability to secure a mortgage.
- Lots of moves - If you’re moving into owning a home from a long period of renting, than the constant changes of addresses could also prove to be problematic for lenders. Again, stability is a key.