The debt-to-income ratio
DTI, according to CRB Kenya, is the amount of debt you pay each month in relation to your monthly income. Lenders use it to determine how much of a loan you can afford. The debt-to-income ratio is calculated by dividing your total monthly debt load (credit cards, car loans, and student loans) by your monthly gross income (Before tax and deductions). A lower DTI will result in lower interest rates and terms. You can lower your DTI by making payments. You can reduce your DTI by paying off debts, asking for a pay rise, and accounting for your income.
Financiers check your credit score by looking at your payment history, overall debt level, length of credit history, categories of credit, and new credit applications. The higher your score, the more likely it is you’ll be approved for a mortgage, and the better your interest rate will be. Therefore, before applying for a mortgage, ensure that you review your credit report. Investigate the standards you’ll need to satisfy your preferred lender.
Down payment requirement
Making a down payment will profit you in the following ways:
- A down payment of at least 20 percent increases your chances of getting a better interest rate
- Some minor charges such as administrative charges and login charges may be reduced.
- A higher down payment means that you have higher equity in your home
Remember, down payments do not include closing costs (extra costs such as stamp duty, legal fees, and valuation fees).
Your work history
It is important to prove how much you earn when you apply for a mortgage. If you are employed and need evidence of employment of at least two years or if you are self-employed, you’ll need to provide proof of income from another source through bank statements.
Remember before you apply for a mortgage request a copy of your credit profile to repair your credit history, pay outstanding debts, regulate your spending habits, nature a saving habit and save for a down payment. If you require any help or have a mortgage-related question, kindly contact us on 0711082929/0708888222 or email us at email@example.com.