Research: One in four first time home owners refused a mortgage

A British research suggests that first time home owners still find it very difficult to secure home loans. 89 per cent of first time home buyers find it difficult to get a mortgage loan said the study from Aldermore.

The study which sampled British home buyers noted that raising a deposit is still the number one obstacle for four in ten of prospective first time buyers, up from 34 per cent in August last year. The number of prospective home buyers in Britain who are currently living with friends or family in order to save for a deposit has increased, from 23 per cent in August 2017 to 27 per cent in 2018. A further third or 33 per cent would consider it if it meant they could get on the property ladder quicker.

One in ten prospective first time home owners said securing a mortgage was their biggest concern. One in four first-time buyers were refused a mortgage when they first applied through their main bank, the report said.

48 per cent of first time home owners said they have had at least one property purchase fall through. For 9 per cent of first time home owners, the general uncertainty of the buying process was the hardest part of buying a house, so much so that the process made some fall ill.

The survey added that almost eight in ten first time home buyers said that buying a property has made them more financially stable. Most-first time home owners felt confident that they will be able to move up the ladder when the time comes.

A home is perhaps one of the biggest purchases one will make in their entire life and the number of things one must consider before signing on the dotted line is immense – especially first time home owners. Knowing about a few common mistakes first time home buyers make and how to avoid them can, however, keep you from being overwhelmed before you take your first plunge into the housing market.

Aspiring first time home owners should work with established mortgage consultants to complete detailed home loan assessment. This process will ensure that they are more successful in securing their home loan. The mortgage consultants will be able to advise about how much first time home owners would be able to loan and how much their monthly mortgage costs would be.

Mortgage brokers are specialists who are well versed with the banking loan process and have access to hundreds of mortgage and loan packages across many banks. Mortgage brokers help property buyers to get the best home loans and home owners to refinance home loans.

In today’s digital age, technological disruption has brought many changes. People no longer call into hotels to book hotel rooms, instead they go to a hotel-room booking site to choose the best matching hotel room.

People no longer sign-in to a specific airlines website to book tickets, people go to airlines booking sites to find the best and cheapest airline ticket.

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The same is also gradually coming to dawn on people that rather than going to a specific bank directly, which may or may not give them the best home loan offer at the specific time. Home buyers and owners are going to mortgage brokers who has a purview to all the bank’s packages and can help advice clients accordingly.

Sure, you can easily walk into the bank and ask for quotes. Most of the time, your property agent would also refer to you a contact at a bank. The point is, does the property agent know which bank package is good for you? How to calculate your loan affordability and interest costs? Do the property agents have the supporting home loan reports to assist you to find the right home loan packages and layout the facts for you?

In Singapore, where we have a good number of local and foreign financial institutions, the choice of a lender and its packages can be mind boggling. Imagine having to compare over hundreds of different loan packages and wondering which is best for you. Even if you are a specialist in finance, it is not so straight forward as there are quite a few variables.

That is where the mortgage broker comes in. The mortgage broker is typically an experienced professional who is familiar with the loan approval process, and having worked with different banks, they know their criteria and what makes the cut. As they are independent, they will also be able to tell you which lender offers the most suitable loan package rather than selling the loan package from the financial institution they represent.

A mortgage broker is essentially a distribution channel for the bank’s loan products. This lowers the bank’s marketing costs. A good mortgage broker helps the customers to filter down and shortlist packages, so as to reduce frivolous loan applications. Frivolous loan applications caused the banking system to be clogged up with many bank loan applications from applicants has no wish to take the loan, but simply to “see what the bank can offer”.

Can you imagine 100 loan applicants making 5 applications each, there will be 500 loans being processed while only 100 loans will actually be taken.

Mortgage broker, they are an essential part of the ecology to help banks have an efficient distribution channel, an optimum number of bankers and credit officers and save a lot of money. If the banks can become cost efficient, they can offer you better rates.

If banks collectively find that the cost of doing business is too high and every applicant applies to 5 to 10 banks, then surely the banks see increased costs and correspondingly raise its prices too. It is possible that banks may even impose an application fee in the future if a loan is not applied and eventually not taken up.

Engaging a mortgage broker can help aspiring first time home owners save time and money, besides making easy the process of shopping for a home loan.

If you are a home hunting for your first home, our Panel of Property agents and the mortgage consultants at icompareloan.com can help you now.

Our affordability assessment and best home loans will put your heat at ease and the services of our mortgage loan experts are free. Our analysis will give best home loan seekers better ease of mind on interest rate volatility and repayments.

Just email our chief mortgage consultant, Paul Ho, with your name, email and phone number at paul@icompareloan.com for a free assessment.