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5 Things Lenders Look for in Mortgage Applications

5 Things Lenders Look for in Mortgage Applications

Getting a home loan is a big financial commitment, which is why lenders won’t just hand over a couple of hundred thousand dollars without going through a strict vetting process.


But, what are lenders looking for when they go over your mortgage application with a fine tooth comb? Here, we look at five of the biggest things lenders need to see if they’re going to approve your home loan.


Proper Proof of Identification


As with any official application, financial lenders want to be able to easily see that you are who you say you are. If you don’t provide the relevant points of identification straight up, not only will the lender responsible for reviewing your application get frustrated, it will also slow down the application process.


You will need to supply at least 100 points of identification, including some form of photographic ID.


For instance, you might need to present a valid Australian driver’s licence, your passport, bank cards/ statements, utility bills and etc. You don’t need to provide every possible form of identification, just enough to meet the 100 point criteria.


Without adequate proof of identity, you will not be able to get a home loan application approved.


If You’ll be Able to Pay Back the Loan


Once the bank or financial institution you’re applying for a loan through know you are who you say you are, they’ll want to know that you have stable employment and the necessary finances to pay back your loan.


During this stage, they’ll also assess whether your income and savings account will also be able to cover your necessary living expenses on a long-term basis, while still making your regular mortgage repayments. They’ll determine this by looking at your taxation history, reviewing your pay slips, your bank statements and your savings history.


They will also ask for an in-depth breakdown of your weekly or monthly expenses, covering things like food, bills, insurance repayments and etc. They will also look at your assets, including cars that you own, any outstanding debts and etc. We’ll delve into a couple of these points in a little more detail below.


If You’ve Supplied the Required Number of Bank Statements


Part of the documentation you’ll need to submit along with your home loan application is a couple of month’s worth of bank statements. These statements will help the lender piece together your financial habits.


Through your bank statements, lenders will be able to confirm that you are in fact receiving regular income and what your spending habits are like. If you have the tendency of craving McDonalds at 2:00 am, for instance, the lender will be able to see this. These statements will also help them see your regular rental payments or bill payments, if relevant.


If You Have a Reasonable Amount of Money in Your Saving’s Account


Another thing mortgage lenders will be looking at when they review your home loan application and your supplied bank statements are how much savings you have.


Lenders want to be able to see that you have the necessary funds to cover the ten per cent deposit that they will require to process your loan application, and that you will have some money left over as a security net. If you would need to completely drain your savings account to cover the ten per cent deposit for your property, the bank will likely flag you as a risk. This is because if you were to lose your job next week, you most likely wouldn’t have the money you need to meet your home loan repayments and support yourself as you look for a new job.


What Your Loan and Credit History is Like


Do you have any existing loans that you’re still paying off? Have you had a loan in the past and managed to pay it off early? What’s your credit rating like?


Your credit and loan history can prove to lenders that you are reliable when it comes to paying off debts, however, it can also work against you. Likewise, no credit history can also be looked on unfavourably, as banks have no way of determining how trustworthy you would be when it comes to repaying such a large sum of money.


If you meet all of the above criteria and are ready to break into the Australian housing market, contact Complete Financial Services to begin your home loan application process today!

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