What Banks and Lenders Consider in your Home Loan

There are a number of factors a lender will consider when you ask for a home loan. Knowing what they are looking for can increase your chances of being approved.

To qualify for any home loan you must have a deposit. Some Banks and Lenders will consider borrowers with a 5 per cent deposit, a number are now looking for a minimum of 10 per cent. However, it is important to recognise that with a minimum deposit, loans will only be offered to clients considered to be a very safe prospect.

In addition you will need to have saved an amount to cover other costs involved in purchasing a property and taking out a loan, such as lender’s mortgage insurance, government stamp duties and conveyancing fees.
For your loan application to go ahead, the mortgage insurer will also have to approve the application and be willing to provide the lender with insurance.

Lender’s mortgage insurance companies require a minimum of six months of ‘financials’, that is, bank statements, pay slips or any other proof of income documents.

With most mainstream lenders, you also need to be able to show a pattern of genuine saving. Often described as ‘hurt money’, it is often required to be at least 3 to 5 per cent of the value of the property. This has to be money you (and your partner) have earned and saved, not a gift or other financial windfall.

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