Do Savings Affect Borrowing Power?
Working with a non-bank lender, such as Mortgage House, helps your borrowing power. Banks hold onto their lending standards for all clients. They don’t offer all the products you’ll find with Mortgage House. Banks hold the line on full financial documentation for mortgages. They also request a 20% deposit.
With Mortgage House, savings increase an applicant’s borrowing capacity. In addition, our loan terms compete with those offered by banks.
Savings increase a homebuyer’s borrowing capacity, especially if you put it toward your mortgage upfront.
An important step in the mortgage approval process is the home valuation. It takes place during the approval period and determines the final amount a lender disperses to the homebuyer. A home valued at $600,000 requires a $120,000 deposit to avoid mortgage insurance. If you provide $150,000 upfront, you only require a $450,000 loan, which improves your borrowing capacity.
Mortgage House is among the lenders that are looking for alternative solutions. For example, it’s possible to place the savings in a dedicated account. The account guarantees the monthly repayment for a set period. Since the funds have a guarantee, your borrowing capacity increases too.
The goal is to lower risk. Our loan specialists have access to tools that assess every applicant’s financial position and goals, including possible home loan interest rates.
Borrowing Power Conclusion
A homebuyer’s borrowing power changes based on many components. It increases if you have a significant amount of money saved. You can put that toward your deposit, which decreases your home loan interest rates cost up-front. For more information, contact our loan specialists at Mortgage House.