5 things lenders are looking for when you apply for a home loan
There’s more to applying for a loan than a large chunk of savings. According to Shelley Stone of BOS Financial Services, the credit environment is more complex than it has ever been. As a result, banks are putting applicants under more scrutiny than ever before.
“Credit reporting in Australia used to be very bland. Now, lenders can see your repayment history on all your outstanding loans for the last 12 months, they can see your conduct for the last 12 months and they can see if you’ve failed to make repayments in the last 12 months.”
Here’s the top things Shelley suggests you do to ensure your application is as appealing to potential lenders as possible.
1. A Good Credit History
It is a myth that if you have never had a loan or any type of credit file that you will not be able to borrow from a lender. Lenders want to see if your liabilities such as a credit card, and most importantly that you have made payments on time. A credit check will be completed by your broker to ensure your score is okay for a lender application and to ensure there are no undisclosed liabilities. This avoids applications going to lenders and an enquiry going on to your credit check that may not be necessary.
2. Sufficient income and employment history
The lender will want to see income whether you are self employed or a PAYG employee. The want to see employment income to ensure you can make payments on your mortgage over a long period of time.
3. Cash deposit or equity
This is through savings or equity in your other properties if you are an investor or own an owner-occupied home.
4. A valuation of the property
The bank will need to see a current valuation of the property you are purchasing and of any other properties which you may be using equity in to secure your loan.
5. All documents and information
When using a broker, they always ensure that when an application if going to be submitted to a lender that all needed documents are supplied and checked for correctness before submitting to the lender.
As Shelley puts it -
“A lot of what we do is talk to you about what you should and shouldn’t do and provide you with advice specific to your circumstances. So, if you haven’t had that conversation already, you should book it in as soon as possible.”
*Independent is not a financial advisor. The information contained is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before making any commitment of a legal or financial nature you should consider the appropriateness of the information having regard to your circumstances and needs and seek advice from a legal practitioner or financial or investment adviser.
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