What Credit Score Do I Need to Purchase a Second Home?
A credit score doesn’t define an individual; it does give lenders a good idea about a person’s financial habits. When it comes to home loans, lenders must understand how much debt a homebuyer can handle. They put the applicant’s finances through several stress tests such as buffering.
During the application process, a second-home buyer has a lot going in their favor. The application process moves more quickly, especially if they have maintained their credit score. Lenders seek a score of 640 at minimum. This places the second-home buyer in the high end of the Average range. To receive better terms, homeowners should focus on keeping their score in the Very Good and Excellent range.
In Australia, a credit score contains several components such as outstanding debt, number of enquiries, credit cards, and current credit limit. The number of accounts opened and closed plays a role too.
Homeowners who seek financing to purchase a second home can leverage their first home against the new mortgage. Lenders still evaluate the applicant’s current financial position. Remember that purchasing a new property means taking on a second mortgage. Lenders must ensure that the homeowner can handle two home loans simultaneously. Thus, they examine the applicant’s credit score.
Mortgage House provides an array of mortgage choice options.
Credit Score and Second Home Purchase Conclusion
Once homebuyers become homeowners, they must maintain their credit scores. This keeps financial doors open to them. To explore your financing options and credit report to purchase a second home, contact Mortgage House. Our loan specialists remain ready to help.