How do I qualify for a loan

How do I qualify for a home loan?

While lending is a fast pace, rapidly changing world with new policies and products released constantly the basics remain the same, lenders are looking for character, capacity and collateral.

Character.

Your lender is looking for a good credit history, in Australia we are moving from a “negative reporting” regime, where you are reported for negative behavior only – to a regime where positive repayment history is also reported, and negative behavior in far greater detail. What does this mean? Where previously you would only be reported for a missed payment of 60 days or more, lenders are becoming able to report a payment which is paid just a few days late. (So move everything to direct debit!) They are also able to report positive behavior which is good news if you need a fresh start.

Lenders are also looking for a stable employment and home address history, and a list of assets which is both greater than your current liabilities, and is reasonable for a person of your age and with your income.

Capacity.

Quite simply, can you afford the proposed loan? In this we are looking at your income and liabilities & other commitments, but also your savings history. If it looks like you have no spare income at the end of the month then can you really afford a new commitment? Perhaps you are willing to make sacrifices for a goal - I can’t tell you how many times I hear “we’ve been living life, enjoying ourselves, but now it’s time to get serious”. If this is your light bulb moment I applaud you for taking action.

Collateral.