Qualifying for a mortgage: The road towards your new home
Written By: Pradeep Gupta
When looking to buy a house with a loan, you need to ask whether you qualify for a mortgage. Indian mortgage lenders base their decisions on a variety of criteria before they approve or reject an application.
The secret in qualifying for a mortgage is to know what lenders want from their applicants. The best strategy is to be prepared before you set up an appointment with a mortgage lender. Thus, it wouldn't hurt to do a little research about mortgages. The more you know, the more likely it is you will qualify for a mortgage.
First, what is a mortgage? It is long-term loan granted by a lender, usually a bank or a private financial company, which allows you to purchase a property without paying for the full price of the property all at once.
For Indian mortgages, the usual length of time is 20 years, and the applicant could modify the length of time that they want for their mortgage to be paid. Choosing the right kind of mortgage for you can give you a lot of benefits.
First, it gives you enough leverage in the future. Second, it is more affordable and attainable, compared to buying a home instantly. Third, a regularly paid mortgage can give you very good credit ratings. This can greatly help you get approved for other kinds of loans like financing a car.
The next step is knowing what it takes in order to qualify for a mortgage. What is the secret behind a successful application? Here are some helpful tips from people who have passed their mortgage applications with flying colors:
- Be ready for the down payment. In a conventional Indian mortgage, the usual down payment is 20-30 percent. If you have what they are looking for, however, mortgage lenders can ask for as little as five percent for residents and 10 percent for non-residents. That is very low and affordable. So be sure that you have enough money to cover the down payment.
- Know your monthly expenses. When applying for a mortgage, it is imperative for you to determine if your monthly earnings can cover your monthly mortgage payment. Knowing how much your monthly expenses are can help you see if you can afford your mortgage. According to the India Mortgage and Housing Corporation, the ideal scenario is when the housing costs (which includes your monthly mortgage payment plus interest, and plus your taxes and maintenance expenses) is less than 32 percent of your monthly income.
- Have a clean credit record. Indian mortgage lenders are very particular with an applicant's credit standing. If you have existing loans or credit, they usually require that your debt load be 30 percent less than what you earn. If you do not have a credit line that you can show them, try applying for a credit card or car loan first. Pay it regularly so that they will see that you are a good borrower.
- Make sure that your documents are ready. Mortgage lenders will usually require several documents which will help them decide if you are qualified for a mortgage or not. Make sure that on your appointment with the lenders, you have a complete set of documents with you. You will usually need proof of income, valid identification, employment certificates and other bank or financial records like other loans and credit card debts.
By following these tips, you can be sure that you will qualify for the best mortgage option, which suits your needs. By following these simple yet effective tips, you are increasing your chances of qualifying for mortgage here in India.
