Top 5 Things to Avoid Before Applying for a Business Mortgage
A business mortgage can really take your organisation places. Owning your own premises can save you costly rental payments every month and prevent you from having to deal with a landlord. Taking out a mortgage can, however, be tricky and securing one normally requires that you as the owner, have an excellent credit rating. Have a read through our top 5 things that you shouldn’t do before you apply for your mortgage, in order to improve your chances of being successful.
Forgetting to check your credit
As previously stated, in order to secure a business mortgage, you as the person signing for the loan will need to have an excellent credit rating. You will need to demonstrate to a lender that you know how to handle money and that you take responsibility for your financial obligations. Check your credit score to make sure everything is in order before you even attempt to apply for a loan.
Falling behind on bills
Both yours and your company’s finances need to be in great order for any mortgage application to be successful. This means that you have to keep on top of all your financial obligations. If you make a late payment or fail to make a payment on any bill it will show up on your credit file and will have bad consequences for you when it comes to your application. Make sure everything is in order, if you need any extra help you can read our blog post on facing up to debt.
Making a major purchase
When you want to apply for a mortgage it is always wise to avoid doing anything that might throw up a red flag on your credit file. This includes making a big purchase using credit. Doing so might suggest to a loans officer that you are frivolous with money but it might also throw out your debt-to-income ratio. If this is too high it goes against you when it comes to a mortgage decision. Make sure you head to Habito.com and secure your mortgage before you make your next big purchase.
Co-signing on a Loan
In order to be successful in a business mortgage application, you need to demonstrate that your existing financial commitments are not too burdensome. When you co-sign a loan that commitment still shows up on your credit file, even though you are not the one covering the monthly repayments and it will go against you. It can be difficult to turn down a friend or family member in need but there really are many reasons why you shouldn’t ever co-sign a loan.
Making big deposits
Mortgage lenders generally don’t like it when applicants make big cash deposits. When forming their decision they like to look for regular income, paid in a regular manner, normally through bank transfer. Cash deposits are just not seen as trustworthy, they can’t account for where the money has come from and it often causes them to doubt your financial position. If you have customers that pay by cash, try and encourage them to pay money directly into your account to save you having to deposit cash.