It comes as no surprise to anyone who has been following the banking Royal Commission or watching the nightly news; our banks have tightened the screws on every aspect of loan qualification. Following is a List of the seven things most likely to influence a loan approval or more often a decline.
No. 1. Too many credit enquiries on your Credit Report – If you have made more than 3 credit enquiries in the last 6 months your Credit Score has been negatively impacted to the point lenders that autonomously “credit score” applications should be avoided. Simply applying for a credit card balance transfer maybe that one enquiry that leads to a Decline.
No. 2. Living Expenses – your monthly expenses beyond the mortgage and any other fixed debt repayment are now “front of mind” with 90% of lenders requiring your last 6 – 12 months personal bank statements which they will forensically dissect line by line to validate your estimate of monthly expenses. If you’re contemplating making application for a home or investment mortgage loan take a moment to go over your last 6 months bank statements and do the math first. The last thing you want is a decline because the next lender will see that decline and guess what – their algorithms will generally ping that as reason for them declining you too.
No. 3. Switching Jobs – whilst the norm for many millennials banks are looking for job stability and while they will often overlook applicants that regularly change jobs, provided they do so in the same profession, they are unlikely to approve your loan if you are in a “probationary period”
No. 4. Post Code and High Density sensitivity – will often translate to a bigger deposit requirement or an outright – No Thanks. If you’re considering buying an apartment especially one within 5 klms of the CBD take the time to check with your broker or lender before making application. Information is readily available to those at the lending coalface to quickly advise you of the yeah’s and neigh’s of apartment addresses
No. 5. If you’re a Uber driver, Deliveroo or contractor you will be required to produce 2 years tax returns and financial statements.
No. 6. Self Employed – See No. 5 noting in addition to the requirement to provide your last 2 years tax and financials most institutions will want your most recent Tax Assessment or Taxation Portal and your budget on how you plan to repay any outstanding tax.
No. 7. Take care when buying “fixer uppers” - We all like a bargain and with home prices on the slide it’s tempting to contemplate purchasing a home or unit that needs a little TLC buy care should be taken to ensure your purchase has the basics. Consider toilets, kitchens, flooring, broken or missing plaster. Lenders will shy away from homes considered uninhabitable at purchase.