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6 things to consider when applying for a mortgage

28th July 2021 Print

Applying for a mortgage is no piece of cake. You need to consider all sorts of things and get many documents ready. Below, we’ve discussed everything to consider. Read ahead. 

Down Payment 

There is no way your application would get accepted if you don’t have enough for a down payment. Lenders require you to deposit a percentage of the home’s asking price. Usually, this would be 5-20% of the amount. Most buyers borrow from their loved ones for the deposit.  

Credit Score

If you have bad credit, lenders would see you as a risk. You only get bad credit if you don’t pay bills on time. 

Improving poor credit isn’t hard. All you do is request a credit report and start making any payments you’ve missed. There are special loans that finance companies and banks offer to people who are seen as risks. You can use the sum to pay off your debts. 

Even if you have a decent score, it might be a good idea to make it better. Banks would offer you the best interest rates. 


How much you would be able to apply for depends on your debt-to-income ratio. If you make a lot and don’t have any financial commitments, you’ll be able to borrow a lot. Depending on the lender you’re working with, the debt-to-income ratio they want to see would differ. 

The two ways to increase the ratio are by increasing your income and lowering your debt. The former is easier said than done compared to the latter. 

If you wait a year or two before applying for the mortgage, you could be able to finish off any other financial commitments you have.

Mortgage Type

There are two main types of home loans. They are fixed and floating interest rate options. If you go for the fixed choice, the same interest rate would be charged on payments. The interest rate for the floating type depends on the market. It’s a double-edged sword, as the market could become unstable and the interest could skyrocket. 


Some lenders are easier to work with than others. They would be more flexible with payments if you miss one. Also, they won’t charge hefty fees if you break your mortgage. You don’t have to look hard to find that the cost of breaking your mortgage can be a lot. 

To pay off the home loan, it would take years. It would be easier to work with a bank that’s friendly for so long than one that’s rude. 

You might be wondering, what is a mortgage stress test? It would let lenders assess if you’d comfortably be able to make payments or not. Some lenders won’t be as strict with the tests than others. 

Payment Period

Would you rather go for a mortgage that takes 20 years to finish off or one that takes a couple of years? Personally, the latter of the two would be better, as you’d be able to get the commitment over with.