Getting approved for a home loan

What is the criteria?

Taking out a mortgage is probably one of the biggest and most important financial decisions you’ll make in your life. But lenders won’t give out a loan to just anyone. In order to qualify for a home loan you’ll need to meet some specific lending criteria. Don’t worry, your mortgage adviser can help you navigate this.

The criteria you’ll have to meet depends on the level of risk the lender is willing to accept and can often differ between lenders. Let’s take a look at what you may need to provide to your lender as part of the borrowing criteria:

Proof of income

What you earn is obviously pretty important to how much you may be able to borrow. This could be your work salary, government benefits or income from other sources.

Being your own boss is great, but it also means lenders will need information about your financials. This can make things a little harder so this is where it really pays to speak to the experts and find out exactly how you will be measured so you can be prepared.

Proof of deposit

A big deposit is a big plus. It not only means you have to borrow less, but also shows your ability to save, giving you a better chance of being approved quickly and easily, as long as you tick off the other criteria.

Lenders are often interested in where your deposit came from and you may need to provide proof of this. For example your lotto winners receipt, details of any gifts from family or parents etc.

Bank statements

Most lenders want to see the your bank statements from the last 6-12 months, showing where your wages have been paid and proof of savings.

Identification

Lenders need to know you are who you say you are. Depending on the lender this could be a current driver license, passport, bankcard or any other document to validate who you (and anyone you’re applying with) are.

Assets

Your assets can work in your favour here. Lenders generally want to know about any assets you might have such as as cars or other properties. Having this information means lenders can assess your financial position and borrowing risk.

Debts

Debt happens. Many people have credit cards, car loans or other personal loans. Don’t fear, this isn’t always a bad thing. Having other debts (where payments are up to date) can show a lender that you are capable of making repayments. That said, things like large credit card limits even if you haven’t filled them up or a myriad of consumer hire purchase agreements can worry lenders and limit your ability to borrow. If you need help getting your personal debts in order speak to us about debt consolidation.

Sale and purchase agreement

This is a legal document which sets out the terms and conditions of your property purchase. Lenders need to see this prior to approving finance.

These criteria and how they are applied varies from lender to lender. It’s our job to help you find the right lender for your needs, maximising your chances of getting approved and owning your new home.

If you’d like to find out more, please register for one of our first home buyers seminars or download our first home buyers guide here.