Deciding as to whether or not it is time for us to buy a home, is one of the biggest decisions that we will ever have to make and having decided to go ahead and buy one, just to be turned down by our bank when requesting a loan, can be devastating. Although we may feel that we are capable of meeting the payments that a home loan will entail, it is dependent on whether or not the lending institute thinks we are capable that counts. Although they will certainly take into account the full amount you earn, they will use an amount that they call PDI (Personal Disposable Income) which is your full income, minus essential out goings such as tax. They will also look at something called your credit score. Your credit score is a number that would have allocated you dependent on your ability to have paid off previous loans on time. Even if this time your intentions are better, if you have defaulted in loan payments in the past, it could count against you, causing them not to provide the loan.
Obviously none of us, having already gone through a lot of self struggle coming to a decision to buy a house, wants to be turned down and may even consider it an embarrassment. This embarrassment can however be avoided. Home loan eligibility is now something that can be checked on the internet and so, although it will give an honest assessment and therefore may say you do not qualify, at least you would have found out in the privacy of your own home. The use of one of these sites can ensure that you don’t actually arrange meetings with your bank or other lending institute until you qualify for a loan, using their criteria, not yours. Of course each of the different institutions may vary slightly in their individual criteria but, at least you will meet the two major requirements and so it should only be a matter of finding the one lending institute that will oblige you.
Of course, there are other criteria apart from the two mentioned, such as the price of the property you are interested in, remembering that they will only lend you up to 80% or 85% (that is one area where they may differ). Also they may differ in the interest rates that they charge as some may offer a fixed interest rate whilst others a fluctuating interest rate. Your age may also make a difference as that could determine the length of time the loan will be permitted to be paid back in.
Don’t forget that even if you have found out that you are eligible online, you will still have to provide the lender proof of earning and if it is a lender other than your regular bank, bank statements for the last 6 months. If you are self-employed, you may also have to provide 6 months bank statements for your business as well as your personal ones.