How to improve your chances of qualifying for a mortgage

Before any mortgage lender can grant you a loan to purchase your dream home, they would like to make first sure you have the ability to repay. 

Your finances will be scrutinized carefully, many questions are asked and plenty of papers to fill out and sign before you know if the house you have your eye on, can be yours.

Lenders will need to consider your personal finances very carefully before making a decision. Your ability to qualify for a mortgage loan will depend on capacity to repay the debt; it depends on your earnings and employment history, expenses, number of dependents, and other obligations you have.

The amount of cash you have for a down payment and settlement costs, as well as cash reserves to deal with expenses that may arise after you're in the home will also be considered in the application stage.

Finally, the mortgage firm will require a down payment   the mortgage which varies from one lender to another.

Also considered is your Credit history - how much you owe, how often you borrow, if you pay your bills on time, and if you're living within your means.

The licensing of Credit Reference Bureaus is expected to improve the speed of risk assessment and ultimately lead to reduced lending and administrative costs. Maintaining a good credit history will go a long way in enabling you to qualify for a mortgage.

Most lenders want to know your monthly expenses and savings culture to confirm if indeed you have the discipline to commit comfortably a mortgage.

For many Kenyans the journey to home ownership is mainly halted by the inability to raise enough capital to kick start the mortgage process.

The government and private sector has responded to this need by introducing a host of new incentives aimed at making home ownership easier for the ordinary Kenyan.

The risk profile of the mortgage industry is changing in response to the demand created through customer preference.

The modern mortgage market has become more creative, and therefore this has led to an increase in the choice and diversity of mortgage packages being offered to borrowers.

By investing in a pension scheme for example, you are increasing your chance of qualifying for a mortgage. The government has today allowed customer to assign up to 60% of their accrued retirement benefits to acquire the home of their dream.

Housing Finance, for example, has introduced solutions that not only allow the client to get financing for their home using their pension, but also cater for the upfront mortgage payments such as the down payment, stamp duty, valuation and legal fees, which are often stumbling blocks to home ownership.

Another major challenge facing most home owners is the ability to have enough income to support the monthly mortgage obligations.

This challenge has been partially addressed through new solutions that allow mortgage financiers to consider supplementary income in the qualification stage.

Today Housing Finance is addressing the needs of those currently in business or planning to change from a full time career to running their own business.

The journey to homeownership starts with financial discipline. By opening a Home ownership Savings Account, you not only enjoy tax benefits as you save for your first home, but it also enables the mortgage firm to better understand your finances, which eases your mortgage application process.

By taking advantage of existing incentives and cultivating a good savings and spending culture, it will be possible to own your dream home sooner than later.