HOME LOANS : 5 MISTAKES TO AVOID WITH BANKS
17 May 2023
1. FORGET TO CHECK YOUR CREDIT RATING BEFORE YOU APPLYBe aware that your credit rating is an important factor in a bank's decision to approve your home loan, or not. If your credit rating is low, you are unlikely to get a loan, or at least not at a high interest rate. Before you apply, make sure you check your credit rating and work to improve it if necessary.
2. NOT BEING TRANSPARENT ABOUT YOUR FINANCIAL INFORMATIONWhen applying for a home loan, banks look at your financial situation very carefully. This includes information about your income and expenses. This includes information about your income, expenses, costs and debts. If you do not provide sufficient documentation, and you cannot justify your ability to repay the loan, you may be refused.
3. BEING REGULARLY OVERDRAWNBank overdrafts are seen by banks as a sign of financial fragility. It is therefore important to avoid overdrafts as much as possible, especially in the months before you apply for a loan. If you are often overdrawn, we advise you to regularise your situation before going to the bank.
No overdue payments, fines or gambling
The same applies to consumer credit or instalment payments (in a physical shop or on the web). Banks are very reluctant to accept these purchasing methods, which they consider to be proof of financial interference. Also, beware of unpaid bills, fines, or gambling !
4. EMPLOYMENT INSTABILITYYour job is a major factor in whether or not you get a mortgage. An unstable job, or a change of direction for example, can make it difficult for your bank to "go for it". Banks prefer borrowers who have a stable job situation and who have worked for their current employer for at least two years.
5. HAVE A HIGH DEBT/INCOME RATIOThe debt-to-income ratio is a key factor to consider when applying for a home loan. If this ratio is too high, banks may consider that you will not be able to repay the loan. It is therefore important to determine in advance how much you can borrow based on your debt-to-income ratio, which should not exceed 33% of your net monthly income.
Source : lamontagne.fr