What is your Borrowing Capacity?

 

How lenders assess loan applications

My Mortgage Professionals can help connect you to a lender best fit to serve your mortgage needs by shopping around on your behalf.
 
Five qualities
In order to decide whether or not to provide you with a loan, lenders will generally assess you against five qualities.

1. Your ability to repay the loan. To establish your capacity the lender will look at your employment history and salary and expenses to evaluate whether you have enough cash coming in reliably to pay the loan over time. The interest rate, the loan amount and the loan term will be used to calculate your loan repayment.

2. How much cash you have up front. Assessing your ability to put down a percentage of the value of the property being purchase up front is standard. The percentages vary though, and specialist lenders may approve a five per cent deposit.

3. The property appraisal price. Since the property is used as collateral if you are unable to repay the loan, the lender will value the property. Based on the valuation report, the lender will decide whether the property is valued sufficiently to secure the loan.

4. Your financial history. Your credit rating will help the lender assess your character as a borrower and whether you are worth the risk. My Mortgage Professionals will conduct a free Credit Check on your behalf so there are no nasty surprises lurking on your credit file.

5. Market conditions. Economic circumstances in the market can influence what interest rate you have access to and whether you need to provide extra security.