What lenders are looking for
When lenders assess a person for a loan, they basically want the answers to some simple questions. This applies to most people buying a residential property.
Q1 Who are we lending money to?
They want to know:
- Your identity – by law
- Your credit profile (through a credit check) – borrowing history
- Your contact details
- Where you live (now and over the past 2 or 3 years)
- What you do for a living (now and over the past 2 or 3 years) (by law) your identity
- Your income levels
- Your asset (what you own) and liability levels (what you owe)
Q2 What do you want the money for?
Examples include
- Buying a residential property – for private or investment purposes
Refinancing other loans
Q3 What is securing the loan?
Residential property.
In each case – in our industry – the security for any loan will be residential property. However, lenders have different policies in relation to what types of property is acceptable.
Q4 What is it worth?
Most lenders will want to know how much the security is worth so that they can gain an idea of how much money they can lend you as a % of the value of the property (this is known as a Loan to Value Ratio)
In many cases, lenders will arrange their own valuation of the property.
Q5 How much do you need to borrow?
Lenders will assess your loan requirement to ensure that it is an acceptable % of the security value
Q6 Can you pay the loan back?
Lenders will assess your income and commitments to ensure that by lending you the money, you are not being placed into a precarious financial situation. At Vision Home Loans we promote the concept of responsible lending.
There are obviously some lenders that may require LESS information than listed out above.
