Even though every Bank looks at your ability to get a mortgage in a different way, they all have things in common they look for to make sure you are a good risk for them – especially if you are a new client to the Bank.
Below are some guidelines on how we get the Bank to say “yes”:
A new Bank has no idea how well you will pay off a loan. The best way for them to get an idea is to see how well you save. A deposit saved over at least 6 months shows them you can commit to depositing money on a regular basis
Age vs. Stage
If you are younger in age the Bank does not expect you to have a lot of assets vs. what you owe against them. However, if you are a bit older and have been earning a good income for a period of time then they expect that you’ll have a better statement of position. There are always good reasons why people don’t have as much saved as they should but, without a good explanation, the Bank will think – Good income for a long period + lack of savings = bad risk for paying back a big loan
Current account statements
The Banks will ask for your last 3 months worth of “everyday” statements. This isn’t to check how much you earn (this is proved in other ways) but it is to see what your account conduct is like. Bounced cheques, honour or dishonour fees are a red flag to the Bank
This is another measure for the Bank about how you are (or have been) at paying back debt. Again, there can be a number of reasons why your Credit is bad but make sure you have a good explanation upfront
Multiple bank enquiries
You might think that applying to every Bank at once might increase your chances of getting a loan but it works against you. The first thing a Bank does is a Credit Check, if they see 4 other Banks have done the same thing then they know they have a 20% chance of getting the deal – this doesn’t make them want to put 100% into getting it approved for you! All Banks are measured on ‘conversion’ ratios from approval to settlement so make sure the deal is theirs until they say “no”. A good Mortgage Broker will make sure you are going to the one lender which best suits your needs.
Finally – Don’t try to hide anything!
The Bank will probably find out and this will end your chances of approval