Joanna Marie, WED | We all are aware of what a mortgage is. In simple terms mortgage is the property which we give to the bank as collateral security when we take any loan from banks. The bank holds the property only till the loan amount isn’t totally repaid, once it is repaid the property vests back in the name of its actual owner.
When is a mortgage required?
In today’s world getting a loan has become easier and the loan which involve huge sum of money plus low interest rate and longer repayment time usually requires mortgage, for example business loan. It doesn’t mean that it isn’t required in other form of loans, it just indicates that it is compulsory for loans including such criteria.
Will my loan be sanctioned?? How do I present my application???
If you are also the one with these questions revolving in your mind while applying for a loan, then here are some points for you to consider in preparing your application:-
- Kind of interest rate- It is extremely important to figure out in the initial stage itself whether you want fixed rate mortgage or a fluctuating one. You should go for fixed rate mortgage only when you are sure that the rate won’t increase in future. If you are unsure about it then there is fluctuating mortgage rate option open you always. Mutual Service aims to provide a competitive interest rate for customers.
- Credit worthiness- For whichever kind of loan you apply, banks always check your credit score. So, it is always important for you to maintain a good credit worthiness. If your debt-to-credit ratio is higher then automatically your score would fall and it would have a negative impact on your ratings.
- Down payment- Do not back off if you do not have a bulk in hand for down payment. Do not go with the saying that you should make a down payment of at least 20% of the loan amount. All these are just myths, there is nothing such hard and fast rule. You can even make a down payment of 5% but is advisable to make of around 10%.
- Paperwork- The lender will not believe you on anything, you need to give him proof of everything, which means all your papers should be accurate. The lender would check all your financial and legal papers and cross-verify them and it is only after proper scrutiny your loan will be sanctioned. Thus, keep all papers intact and be ready to present to your lender.
These are the 4 points which you must consider while applying for a mortgage in order to get your loan passed successfully.