It is less than a week left before we say goodbye to 2019 and greet welcome to 2020. Now maybe a good time to think about what your New Year’s resolutions will be.
If buying a home is at the top of your list, it will be helpful to have resolutions that can keep your financial health in shipshape
Cut down on monthly subscription services
Yeah, it surely seems convenient to have monthly subscription services especially when the payments are automatically deducted from your credit cards.
But, one of the downsides of doing that is you may not realize those payments can hurt your credit rating.
To make things worse, the guy from the bank’s credit risk department may pull your report before you settle your credit card balance in full at the end of the billing cycle.
To avoid that kind of unpleasantness, only subscribe services that you need and better still, settle your bills by paying in cash via debit cards.
Pay your debts on time
Easy to say but hard to do, all the more so for bad paymasters. Please keep in mind, nothing makes lenders happier than loans paid on time by borrowers.
Your ability to pay loans, credit cards, and bills on time will reflect positively on your credit history.
Anyhow, some people may think that it will be easier to secure loans if they haven’t borrowed money from any financial institution or made purchases using credit cards.
That is considerably untrue because your home loan application may be rejected due to your nonexistence in the credit realm.
Always monitor your credit
You never lag in paying your loan installments and bills. So, you think your credit rating is OK. Then, you go and apply for a home loan.
All of a sudden, you find out the bank rejects your loan application because your best friend defaults on his business loan and of course, you are his guarantor.
You can save yourself from this unpleasant situation by checking your credit frequently. At least, do so once a year.
Resist the temptation to take big fat loans
Forget about buying a new car or taking your family overseas on an expensive vacation. In any case, hold your horses until your home loan is approved.
Lenders are also particular about your debt-to-income ratio or to put it in layman’s term, the amount of your debt payment divided by your gross income.
Your loan application has a greater chance to be approved if you have a lower debt-to-income ratio.
The lower your debt-to-income ratio, the less likely you will face trouble in repaying the home loan in the event of financial hardship.
Don’t change jobs
Although it sounds old-fashioned, the saying ‘a rolling stone gathers no moss’ always rings true.
Potential homebuyers should stick to their current jobs as a career move especially to a different industry may raise some alarm to lenders.
Job loyalty can be a positive factor in backing your home loan application as it allows financial institutions to forecast your future income easily.
Besides, the job market in Malaysia doesn’t look good these days due to unfavorable economic conditions which began last year.
On a final note, we at Red Angpow would like to take this opportunity to wish you a Happy New Year. May 2020 will bring success and happiness to all of us.