5 Tips to Fast Home Loan Approval
March 31st, 2010
Although every bank has its own individual assessment criteria for a home loan there are some common features which every bank will cover when you make your application. Let’s look at a typical first home borrower and list some of the things that the bank will be looking at.
- Employment History. Every lender will want to make sure that the borrower is currently in employment and has a history of steady employment. Normally a first-time borrower should be able to demonstrate an employment history of at least one year in permanent full-time employment. In some cases the bank will require a longer period of employment depending on the industry and the amount of money applied for.
- Income Level. It goes without saying that the amount of income borrower is able to demonstrate by way of payslips and PAYG summaries will ultimately determine his or her borrowing capacity. All income is offset by any existing debts such as personal loans or credit cards. In making this current elation the bank will take into account the limit of the credit card rather than the outstanding balance.
- Credit History. Any lender will want to ensure that the applicant does not have any adverse items on their credit report. So, a borrower who has a history of , court judgments or bankruptcies will have a difficult time convincing the lender to approve the loan. Each application is dealt with on a case-by-case basis however, and if the amounts of money are minimal and a suitable explanation is available the loan may still be approved.
- Savings History. A first time applicant for home loans will probably have to show their ability to save money. In most circumstances the bank will require you to provide 3 to 6 months worth of transaction account statements showing regular savings, and an accumulation of at least 5% of the purchase price of the property being considered. This shows the bank that the potential borrower is able to exercise discipline in their financial affairs.
- Common Sense. In some cases a bank will consider an application on its individual merits. This means that even though borrower satisfies every criteria listed above it may still decline the application if they judge the application to lack commercial appeal. In other words they simply don’t like the look of it! This may happen if the bank has some doubts about the accuracy of the documents provided to support the loan or there may be other elements such as the location of the property that they simply do not like.
Although this outline is not an exhaustive one and bank lending policies change all the time, if you satisfy the elements on this list is more than likely that your home loan application will be approved.
Another point to bear in mind is that even though one bank may reject the application another bank may approve it. When a bank declines a home loan application it is not a reflection on the individual, rather it is only a reflection on the bank’s lending policy.
