The Five Things that will hold up your loan approval
Anyone who has recently gone through the motions of applying for a new home loan will vouch for the fact that it can be a long, drawn out and often painstakingly slow process. Impacts from COVID-19 and that many lenders are still operating remotely, historically low interest rates and lender incentives leading to increased demand for credit as well as a buoyant property market have been a perfect storm of factors making banks struggle to deliver fast turnaround times.
To that end it is more crucial than ever to ensure an application is submitted with as few errors as possible and with everything the lender requires straight out of the gate. If an application is stopped due to a request for more information, it goes right back to the back of the queue when the additional information is forwarded. Here are some of the most common and avoidable things to be aware of if you are applying for a home loan.
Whether it be pay slips that have expired, bank statements dated outside the time frame required or just simply documents that are not what the lender has requested, each item being forwarded must be in line with what the bank requires. Your broker will be vigilant in ensuring all that is sent is exactly what the lender requires but as an applicant it is prudent to also take ownership of what you are presenting and ensure your documents are in order.
Your residential address history, employment history as well as your statement of position all will be scrutinized with the lender. When your broker is capturing your information make sure that everything is correct and up to date. Delays will be incurred if the assessor must clarify certain facets of your history and position that could have been avoided from the beginning.
Undisclosed debts or expenses
Whilst most people do not mean to not declare all their commitments, sometimes it can be a case of not knowing what actually constitutes a debt. For example, even if you have a credit card that is never used, it doesn’t mean that it does not exist as it’s a credit facility you have access to. Facilities such as Zippay and Afterpay, also must be taken into consideration and can have a significant effect on an application. Even if the additional debts will not alter your position to obtain a new loan, the time taken to source statements and forward them for review will cause delays.
A checkered credit report
Before applying for a home loan, ask yourself if there is anything in your financial past that may come back to haunt you. Do you have a known default on your file, was there a Telco bill you forgot about or a credit card you though you had paid off but the remaining balance was not cleared on time? Take the time to do a credit check to be on the front foot of any skeleton’s in your closet. Depending on what you have going on, your broker will be able to advise on what can be explained to the lender and what documents will be needed to support your case and potentially mitigate delays.
Questionable Bank Transfer references
If you have any regular payments going out or even in from friends and family be mindful of how they are notated. Lenders are probably less likely to see the humour in references of “Drug Money” or “Gambling Addiction” as opposed to “Christmas Party” or “Mum’s Present”. Try to avoid anyone using such descriptions and maybe have your broker make a note in the application to clarify what any similar notations are for because the bank will certainly want to know.
Now more than ever its crucial to get your applications right. Some banks are taking weeks to assess a new file so when they do pick it up, you want it as error free as possible. Near enough is not good enough in the lending world right now and always lean on your mortgage broker for the right guidance to ease your stress.