6 Common Mistakes to Avoid During the Mortgage Approval Process In The UAE
The process of securing a home loan is tedious with a lot of technicalities. First-time homebuyers aren’t familiar with any of these things. In this blog post we are going to talk about the common mistakes homebuyers make during the mortgage approval process.
So, without further ado let’s begin.
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Not Comparing Lenders
Choosing the first lender you come across can be a costly mistake. Mortgage terms and rates vary significantly between lenders, and failing to shop around can result in higher monthly payments or unfavorable terms.
Solution
Compare offers from multiple lenders. Look beyond mortgage interest rates and consider fees, loan terms,early & partial settlement chargers and customer service. A mortgage broker can also help you find the best deal tailored to your needs.
Overlooking Additional Costs
Another common mistake a lot of people make is that they only consider the base price of the Property along with the mortgage payments. They don’t realize that there are other additional costs like DLD chargers, brokerage, property & life insurance, valuation chargers, Mortgage processing fee, mortgage registration fees or even closing costs.
Solution
Add all of these additional things in your budget when you’re assessing how much you can afford. For that we suggest getting help from your Mortgage advisor, who will give you the right estimate with these expenses.
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Failing to Check Your Credit Score in Advance
When you are in the mortgage approval process of securing a mortgage in the UAE you should have a good credit score. A positive credit score determines your mortgage loan amount and LTV (Loan-to-value). A lot of the first time home buyers only assess their credit score applying for a mortgage. This mistake leads to a delay or a derailment in the approval process.
Solution
To get around this we suggest going through your credit scores before applying for the mortgage. You should check if there are any errors or negative marks that could impact your score. If there is any stuff of that sort, dispute them with the credit bureau. Similarly, always try to maintain a good credit score by Paying your bills on time, keeping credit utilization low, paying down debts and keeping track of your credit payments and history.
Not Providing Accurate or Complete Documentation
Incomplete or inaccurate documentation is a huge red flag for a lender. That’s why it can lead to delays or rejections in the mortgage approval process. You’ll need to provide the lender with the accurate documents for a smooth process. This includes proof of income, tax returns, bank statements, liabilities and personal details
Solution
We suggest always keeping all the documents ahead of time. Similarly, go through those documents for accuracy before you submit them to your lender.
Making Large Financial Changes Before Closing
Big purchases like buying a new car can have severe consequences on your mortgage approval process. Even something as insignificant as switching jobs can jeopardize the entire mortgage process. Lenders are always monitoring your finances. That’s why a sudden peak or a drastic drop in your finances can raise red flags.
Solution
We recommend holding off any major financial changes until you get your mortgage. Try to stay on track during this process by keeping your stable employment while keeping your expenses below your income.
Ignoring Your Debt-Burden-Ratio (DBR)
A DBR basically stands for debt-to-income ratio. Your DBR measures the percentage of your monthly income that goes toward payments. If you have a high DBR that means you are less likely to secure a mortgage loan or at least get it on your favorable terms.
Solution
Always calculate your DBR ratio before applying for a mortgage. If that is too high, try focusing on bringing that down. You can do that by lowering your credit card limits, paying off car loans or personal loans or any similar liability.
FAQs
Assessing your income, expenses, and existing cost helps determine your borrowing capacity. It prevents overextending financially.
Overlooking your credit score may lead to unfavorable loan terms or rejection.
Significant expenditures can alter your debt-burden ratio. This potentially jeopardizes the loan approval. To get around this we recommend maintaining financial stability during this period.
Misunderstanding loan terms can lead to unexpected costs or obligations. So, thoroughly review and seek clarification on all conditions.
Without pre-approval, you may face delays or miss out on desired properties. The pre-approval process structures the whole buying process.
Employment changes signal instability to lenders. This potentially affects your application’s success. That’s why it’s advisable to maintain a stable employment at least until the mortgage is obtained.
Ignoring expenses like maintenance, insurance, and utilities can strain finances.
Final Thoughts
Avoiding these common mistakes can make the mortgage approval process smoother and increase your chances of securing your home loan. Preparation, research, and disciplined financial habits are the key to success. For personalized advice and expert guidance, consider working with a professional mortgage loan advisor.
Also, try getting professional advice from an experienced mortgage advisor such as Crown Finance. We help you avoid these pitfalls working alongside as your professional mortgage advisors.