How to Make Your Mortgage Application Attractive to Banks

The ability to finance the purchase of a home or investment property with a mortgage is usually taken as a given.  However in recent times banks have started to become stricter with their lending and are increasingly denying higher risk mortgage applications. 

When considering loan approvals, what we’re seeing from banks is a tightening of credit acceptance standards.  This involves an increased focus on stable employment backgrounds, as well as closer scrutiny around evidence of the disciplined savings and clear credit histories of applicants.

Lenders are also reducing the level of satisfactory loan-to-value ratios, meaning that buyers must now have a larger amount of their own money available to put towards the purchase.   

Put simply, the higher the risk you represent to a bank, the less likely the chances of your home loan application being approved, which means missing out on your property.  With this in mind, if you take the time to make yourself as attractive as possible to a bank, it will definitely pay off. 

So what steps can you take to increase the chances that your home loan is successfully approved?    

To begin with, I’d say that having a larger deposit saved goes a very long way in the eyes of a lender.  Not only does this reduce the amount a bank must lend to you, thus reducing the risk it must take and the interest you pay, a deposit is also evidence of a clear commitment to saving, which is highly regarded. 

Paying attention to reducing the balance of your credit card and other debts to zero will also place you in good stead with the banks. Having a solid credit rating and few debts makes you an attractive proposition.

When you first start thinking about applying for a loan, be as selective as possible in choosing a lender.   Try to identify one that is the best fit with your requirements and make sure you take the time to carefully put together your application, rather than rushing it and leaving out important information.  Any failed loan applications will show up in your credit history, making your application less and less attractive to any subsequent banks you approach; ideally you want your first try to be successful.       

Obtaining home loan approval doesn’t need to be hard - take the time to complete the process thoroughly and strategically, showing banks that you will be a trustworthy customer.


Posted by Charles Tarbey on 01/06/2010 at 10:23 AM | Categories:


Ellen Smith

Ellen Smith wrote on 30/06/2010 2:52 PM

Thanks for this great post - as a soon to be first home buyer, I found this blog a really good resource with lots of clear info.

Write your comment

Leave this field empty: