When it comes to mortgages, home owners are always out to get the low interest mortgage rates available, but often times are not able to qualify for those rates. This can be for a variety of reasons including credit rating, credit history, income, employment status and existing debts. Low interest mortgage rates are essentially offered on the bases of how strong the applicant is in qualifying for a mortgage. Banks want the best of the best and at the same time, the applicants that are in that category will shop around until they are offered exactly that.
Your credit rating and history show how responsible and disciplined you are as a borrower with your credit cards, loans and other debts that you have. It also shows how much debt you using compared to how much you are allowed per creditor to evaluate you on your specific risk levels. When it comes to low interest mortgage rates, you have to be able to prove that you are a responsible borrower and do not always utilize the maximum you are able to borrow.
Getting low interest mortgage rates are also affected by your income and employment status. These items are important because they determine your affordability and likelihood of repaying your mortgage. Sometimes banks may determine that you can afford a mortgage, but your debt ratio’s are a little on the high side. This can sometimes prevent you from receiving the low interest mortgage rates you seek. The idea behind this is that, the greater the financial burden of your debts on your income, the less likely one is able to make responsible payments to those debts. When it comes to employment status, banks are looking to establish the likelihood of you continuing to receive steady income for years to come. If you are self-employed, banks will look at various financial documents to determine your average yearly income over the past 2 years (minimum). If a self-employed individual can show adequate income and consistency, then the banks will be satisfied with offering you the low interest mortgage rates (assuming all other conditions are satisfied).
To sum, you have to put yourself in a position that cause the banks to keep you from shopping around. The more “polished” you are, the more likely that you will be offered the absolute best that there is to offer. If you have “blemishes” or are deemed as a higher risk, then the banks will not need to offer you the absolute best because they know that this would be the case anywhere you try to go.
If you would like to learn more or if you have any questions, please call us today! 905.455.5005