Why You Should Stay at Your Job and Prepare a Deposit for a Mortgage Loan

Most people feel nervous when it comes to tackling financial decisions they have to make in their lives. With all of the complicated terms and complex rules governing things such as loans, the anxiety that they feel is completely understandable. However, we believe that with a little knowledge comes more self-confidence, so one way that you can help yourself get over your fear of getting a mortgage loan is to educate yourself on how exactly it works. In fact, the best way we can learn is by analyzing the mistakes that others make so that we can make smarter choices when it comes to money and property.

In this article, we will discuss a few common mistakes that people looking to apply for a mortgage often commit. At the same time, we will also talk about how to avoid falling into the same traps so that you can have a much better chance of getting your mortgage application approved.

Not Preparing a Sizeable Down Payment in Advance

If you are struggling to get even a small deposit together, it will be good for you if you ask for help from your friends or relatives. You may think that it will give you less stress to just tell the banks that you do not have the money right now but can pay off the monthly dues, but it will actually make them think that you are not the best person to give a loan to.

Most banks will be looking for at least 20 percent of the total payment for the property that you are looking to purchase. Otherwise, you will be considered as a much lower priority candidate for a mortgage. After all, if you do not have any money to present at all, then it will be hard to convince the banks that you can actually earn enough money on a consistent basis and pay off what you will owe them per month. According to an article by Richard Meadows on Business Day, Steve McGowan, a broker, warns that you may also be hit with what is called a low-equity margin or fee, which can be anywhere from 0.5 to 1 percent of the total payment.

In addition, not having an impressive down payment may actually reduce your chances of being able to negotiate anything about the mortgage. This is especially troublesome, especially if you were looking to ask the banks to waive certain fees from your contract. At the same time, these financial corporations may also not take you into consideration if they have any special promotions going on, whether in terms of cash deals or reduced interest rates.

Quitting Your Best Job Before Applying for a Mortgage

Even if you may be itching to quit your current day job due to any number of personal reasons, it is usually best to stick around for a while longer, especially if you are going to be applying for a mortgage anytime soon. Most banks will want you to have stayed in your current job for at least a year, at minimum. You will raise your chances of getting your mortgage approved if you have stayed in the same job for at least two or more years, since it shows that you are financially stable and can continue to remain in that kind of position for the next couple of years.

 

If it is still a bit hard to understand why banks make such important judgments based on your resume, then let us take a look at a possible scenario. For example, if you were to quit a relatively high-paying career as a manager in the IT industry and then proceeded to pursue a job as a barista in a local coffee shop instead, the banks will most likely think that you are either not responsible enough to hold one job for a long period of time, or will think that you are a risky candidate to give a loan to. According to an article by Valencia Higuera on Money Crashers, quitting your full-time office job to pursue a freelance career can also negatively affect your standing with your lenders. A freelance career does not guarantee that you will receive a paycheck every two weeks, since it all depends on whether or not you are skilled enough to get enough clients. The only way you can probably get your loan approved as a freelancer is if you have been in the industry for a long time and have enough of a deposit to prove you can afford it.

However, your chances are generally a little better if you quit a job but found another one within the same industry. Just do not go around switching jobs every year or every few months, as you will appear to be incapable of maintaining a steady amount of income in order to pay off your debt.

Preparation and Education Will Increase Your Chances of Getting the Home You Want

Now that you know more about what you should not do, you should be able to increase the likelihood of getting an approved mortgage loan application without a problem. Just do not forget to take into account some other factors to consider when scouting for new places to live in. Some of the most basic things you need to know is how much money you will need to shell out on a regular basis to pay off your loan. If you need help computing just how much you will need to pay every month, you can try using tools such as PropertyGuru Singapore’s mortgage calculator, especially calibrated for properties found in Singapore.

If you happen to commit a mistake that we did not discuss here, it will not be the end of the world. Make sure to seek the advice of financial experts so as to fix whatever problem you may have found yourself in, and with enough time, you will be able to get yourself the best place that your money can buy.