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In the last five years since the housing market collapse, it has become significantly harder for people to get home loans. Banks were burnt by people who took out home loans that they couldn’t afford and weren’t able to pay back. While this means that houses are more affordable than ever, it also means that it may be harder than ever to acquire a home loan for people looking to buy their first house or for people who already have a loan but are looking to refinance as they reach the end of low introductory periods.
Both the scenarios are highly dependent on what you’d like to get (the kind of house that you’re looking to purchase or refinance) and your personal financial health. Lenders often look at the relationship between the two – in other words, now, more than ever, lenders want to know that you’re trying to purchase or refinance a home that you can afford.
Obviously, your credit rating will be important to lenders. People who already have mortgages that they’ve been paying off every month will be ahead of the game, since they have a history of being able to pay their debt reliably.
For new home buyers, however, you can give yourself a better chance of securing the kind of home loan you need for the house you want by being able to offer a down payment. The larger the down payment that you can afford to pay upfront, the better chances you have of getting a home loan. This is because the bank will already have some of the principle of the house in hand, lessening their financial risk.
