5 Things Lenders Want to See On an Application
How to properly prepare for a Lender Application
There are a number of things that are a big tick for lenders when it comes to home loan applications. Many of them are simple preparations, but the result can be extremely rewarding.
1. Good Repayment History
On March 12 2014, Australia changed to a positive credit reporting system which means that lenders are now able to access more information on your credit report. These changes were implemented so lenders can get a better insight into a person’s financial position to ensure they would be able to meet the mortgage repayments.
One of the significant changes is that lenders can see the past 24 months of your repayment history. So, if you are able to meet your bill repayments on time, lenders may consider you a good risk and offer you a more competitive home loan.
2. Paperwork is Organised
Missing paperwork can often slow down the application process and can be a concern if you are on a tight deadline for purchasing a property. There is a certain amount documentation required by lenders in order to verify your information. Requirements can vary from lender to lender, but the required paperwork usually includes: credit card statements, bank statements, pay slips and payment summaries.
The best way to ensure you include all of the right paperwork is to speak with your lender about what is needed before submitting your application.
3. Minimal Debt
Too much debt can affect your borrowing power as lenders need to be able to see that you have enough money to pay off your mortgage. If you can only just afford your current financial commitments, lenders may be wary to let you take on mortgage.
Before applying for a home loan, try to cut down as many expenses as you can. Ongoing commitments such as gym memberships, credit cards and Pay TV can affect your borrowing power, so the less you have, the better. Also, by getting rid of these extra expenses, you can use the surplus money to save a larger deposit, which will help you avoid other fees such as Lenders Mortgage Insurance.
You may assume that lenders will only assess the information you tell them, but that is not the case. Lenders have access to even more information now that the new credit reporting system has been implemented, so there is a good chance they will find any defaults or other financial information that you do not disclose. If they do uncover information you have not disclosed, not only could it slow down the application process, but lenders may be more cautious to offer you a competitive home loan.
5. Strong Employment History
Your income is extremely important when it comes to applying for a home loan. Lenders need to see that you can afford the mortgage repayments and are in a secure employment position. It is a requirement for most lenders that you have been at the same job for at least 6 months and you are not on a probationary period. It can be extremely risky if you decide to change jobs just before you apply for a home loan. It may be best to wait until after you have been approved before changing.
For more information on lending contact Paul Douglas-Irving direct on 0438 232 505 or email your enquiry firstname.lastname@example.org.
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.