My Income
How does the lender assess income?

The variations to the types of incomes a person receives (eg. Salary, small business owner dividends, contractor payments etc) are viewed by the banks differently. Income streams can come from any of the following; permanent part time income, casual income, commissioned income, overtime, self-employed income, contractors, maintenance, pensions and rental income.

When you are being assessed for a loan application, lenders have set policies as to how they will treat specific types of income and how reliable or certain that income is. Each lender has its own set of policies, many are the same, some are different.

This will obviously affect which lender will approve your loan. It will also affect the maximum amount of money a particular lender will lend you. The type of income that you earn will therefore have an effect on low much you can borrow and your much paperwork you will need to supply to substantiate your earnings.
Consider the following example.
Casual income will be accepted by a particular lender in assessing your ability to service a debt after only a 6 month history with the same employer. Another lender, on the other hand, will need two years worth of history before they will accept casual income at all.
This is where your personal lending manager can really assist you, not only with what products may suit your needs, but also which bank will suit your type of income.

Credit History   
Why is credit history important?

Whenever you apply for credit, a record is kept with the Credit Reporting Authority (CRA). Whenever a person defaults on a credit contract this is also recorded on your CRA reports. This report is accessible to all credit providers. When applying for a home loan your CRA report has substantial impact. If there are any defaults on your CRA you will need to give a full explanation as to how and why they happened. The worst areas for CRA listing are from telephone providers. That outstanding telephone bill that never got fixed up will undoubtedly come back to haunt you when applying for a home loan. If you know of any defaults on your CRA, or suspect you might have defaults, you should talk to one of our personal lending managers about what options you have.

What is mortgage insurance?
How did you save up your deposit?

Mortgage insurance is required by all banks on all housing loans. It is important to note that this insurance protects the bank from any losses - not the borrower. If a borrower defaults on their mortgage and the lender suffers a loss, then the insurer will reimburse some or all of this loss. Although mortgage insurance protects the lender, the premium is paid by the borrower. It is a one off premium, paid on settlement of the loan.

How much is the premium?

It depends on how much you are borrowing and what the percentage of the loan to the value of the property is. Our personal lending managers can discuss how to minimize or avoid this fee. A loan usually cannot be approved without mortgage insurance acceptance. Mortgage insurers have very strict policies determining whether or not they will approve an applicant for insurance. The higher the ratio of the borrowings to the value of the property, the tougher they are. Obviously, there is more chance of a loss being incurred by a borrower who borrows 95% of the value of the property than borrower who only borrows 85% and this is reflected in their attitude to insuring the business. This is also reflected in the premium they charge. The higher the ratio, the higher the premium.

What Are The Mortgage Insurers Looking For?

Depending on your situation, mortgage insurers will look at a number of things.

How long have you been in your job? - "Job security"                           

How has the borrower saved up their deposit - "Savings pattern over 6 months" How has the borrower performed on previous debts - "CRA report" Once again, your personal lending manager is skilled in packaging your loan application not only for approval by the lender but also to meet the requirements of the insurer, putting you, the borrower in a better position for a quick approval by all parties involved.