In the financial business, as in life, there are two types of news: the good and the bad. A client breathes relieved when he receives the approved credit report. But, it bothers to receive the denial of the approval of mortgage credit. It is unpleasant news. It often happens that the client had been excited about his project to buy a new house; or, in many cases, he is surprised because he was sure he could pay a mortgage loan without problems.
As in many countries, financial institutions in Colombia have clear policies for credit approval.
A negative point in any of the requirements that must be evaluated disqualifies the application. Let’s review:
The financial institution is very strict with the review of all documentation. It is important to submit well-filled forms, clear photocopies, actual data and current documentation. For example, if it is indicated that you present the last three removable payroll or Proof of Payroll, not present those of six months ago. Each data is confronted, should not make inconsistencies.
Of course, the documentation required to evaluate the property you want to buy is also important. The bank is going to mortgage the good in its favor, therefore, it needs security over its legal history. It requires the information to do the study of the property.
Banks are flexible to understand that income can come from various sources: salary, rent, remittances, fees… But it is important to be able to prove it. The removable payment or Proof of Payroll, the lease, the draft must be in the name of the applicant.
When applying for a mortgage loan, you are requesting approval from the bank to accompany you for many years in a business. You will need to show that you can fulfill your commitment. Do you have 100% the quota of your credit cards? Expenses can impair your borrowing capacity.
4. Other credits
Situations in which a client has a pre-approved credit are not uncommon and then, when he already presents the documentation to formalize the business, the application is rejected. One reason may be that, after the pre-approval, you applied for a new credit for the purchase of a vehicle, accepted a credit card with a high quota or accumulated several credit cards with high quotas that add good money. These products can decrease borrowing capacity and result in denial of credit.
5. Credit history
Being reported to the risk center can be a clear reason not to approve the loan application. Likewise, improper handling of other financial products, such as overdrafts, arrears, inactivity in the accounts, can result in poor scores.
If you submitted the loan application within a few weeks of taking possession of a good position, the bank may want to wait a bit before approving your application. Job stability is an aspect that the bank evaluates for approval. Some banks are clear in demanding at least twelve months of work in the same company, either as an employee or as an independent. Luckily, this is not the only factor to consider. A good advisor can help in these cases.
Having a diagnosis of a life-threatening illness may be a reason for not approving the credit. Likewise, being over 70 or under 25 may complicate credit approval. Health conditions must be good to take life insurance.
8. Type of product requested
In Colombia there are approximately 42 financial institutions that offer mortgage loans. And each of them has several products, several alternatives. It is important to know them to determine which is the best option for a customer.
9. Choose the amount to request
This aspect is key. Some customers ask for a little more money to make renovations or buy furniture. It could be a good idea. The documentation of the value of the real estate and credit must be in accordance; and the ability to pay must always be demonstrated.
I really like to inform a client about the approval of their credit. And I like it even more when they ask for advice after receiving the bad news of a denial in the approval of a mortgage loan. Almost always, I find solutions.