How Do Lenders Look At Loan Applications?

Here Are Some Pointers!!


So what exactly do lenders look for when it comes to giving pre-approval/ approval to a loan application. Well in order to decide whether or not to provide you with a loan, lenders will generally assess you against four qualities.

 1: Your capability to repay the loan. This is pretty straight forward! To establish your capacity the lender will look at your employment history and salary to evaluate whether you have enough cash coming in reliably to pay the loan over the agreed loan term.

2:  What deposit will you be contributing if you are purchasing a property. Assessing your ability to put down a percentage of the value of the property being purchased up front is standard. The percentage varies though, and some specialist lenders may approve a five per cent deposit. However, many lenders will require you to put down at least a 10% deposit plus cover the associated costs too (ie. stamp duty etc). A mortgage broker is best suited to letting you know what a lender requires in this area.

3: The property valuation. Since the property is used as collateral the lender will want to ensure the property is an appropriate security. In regards to a purchase some lenders will accept the Contract of Sale as being good enough, however, if the property is over a certain amount then the lender may request a valuation be undertaken (normally at the bank's expense)

4:Your financial history. Your credit rating, expenses and debts will help the lender assess your reliability as a borrower and whether you are worth the risk.

  In helping clients all over the Northern Beaches, Inner West and the North Shore areas of Sydney, at Horizon Mortgages we ensure through appropriate consultation with you that we match you with the right loan choice at the best possible interest rate! What's even better is that you don't pay for our services as the banks pay us a commission to introduce you to them.