How do I get accepted with flying colors? How to present yourself in the best possible light to the lender

Having a strong case to present to lenders is very important as it goes beyond actually being accepted for a loan. A strong case can also enable you to get better discounts and special clauses.

A lender looks for two things when assessing a borrower. The first is the ability to repay the amount that the particular costumer wishes to borrow and the second is the degree of financial and lifestyle stability of the borrower.

Let’s see what you can do to be more attractive to a lender.

LTV

First of all, the amount that you are willing and able to put down at the beginning of the mortgage will determine what type of mortgage you can opt for. The higher the amount you can come up with upfront the lower the interest you can opt for.

This happens because having some money of your own is proof to the lender that you can be disciplined enough to save or that you can resort to unofficial lenders (family or friends) that may also help you in case your are unable to repay the whole amount.

Guarantors

If you are currently on a low income but would still wish to have a mortgage, a guarantor would help. If your financial standing is not firm enough a third party may provide a guarantee of payment. A guarantor is bound by legal agreement to take on the responsibility of payment should you become incapable of honoring payments. A guarantor would also help even if you are eligible but you would want a bigger loan.

Mortgage Insurance

Mortgage payment protection insurance is another way of being more attractive to a lender. This type of insurance will cover your mortgage payments should you become unable to pay them yourself do to illness, unemployment or accidents.

Being wiling to take out this type of insurance raises lender trust and guarantees your payment capacity but comes at an extra cost.

Final Word

All these means of raising lender trust are advisable but remember that each has it’s costs and there may be cases where it is simply not necessary.

One particular case where all these means should be employed is bad credit history. For a detailed account of what you can do if you have bad credit history please refer to our bad credit guides.

If you have used all the above recommendations and still the lender will not grant you the conditions you wish for it may be wiser to modify your mortgage option. Please see our other mortgage guides because surely we have a solution for you.