First up, before we can answer that question, you need to understand that;
- Home Loan Brokers in Melbourne, can access literally hundreds of different Melbourne Home Loans on offer at any time, from in excess of 30 lending institutions, and
- Each lending institution applies their own, often very different lending criteria, to their own loan products, some going as far as to have different lending criteria for each of their products.
What this means is that our answer to this question can only be of a general nature, encompassing lending criteria which are commonly found in most mortgage loan products, although the measurements applied to meet criteria may vary significantly.
Common Melbourne Home Loans lending criteria include;
- AGE – You must be at least 18years of age. If you are over 55 years old, you may have to jump a few extra hurdles to qualify for a loan, and you may be offered a shorter loan term which can reduce your borrowing capacity.
- RESIDENTIAL STATUS – Most home loan lenders lend to permanent Australian residents as well as non-residents. You need to be aware that different assessment criteria apply to each group, and permanent residents will generally qualify for a higher loan to property value ratio than non-residents.
- INCOME – Must be regular and your monthly surplus after deducting all living and other regular expenses needs to be enough to cover monthly mortgage repayments with a buffer for potential future interest rate increases.
Full-time PAYG employees with more than six months continuous employment plus at least twelve months industry experience fare best, needing just to provide payslips and last year’s payment summary as evidence of income. Self-employed sole traders and business owners must produce tax returns/accountant certificates and may need to take out “Low Doc” loans at higher interest rates.
The major differences between lenders is how they treat income from casual employment, shift work and different types of allowances available to full-time employees as well as the percentage of weekly rental income they will accept when determining loan serviceability.
Your Melbourne Home Loans Broker is best placed to advise you which lenders will look most favourably upon your loan application if your income includes any of the above. If you have a negatively geared property, you will find many differences in how lending institutions treat the losses that are incurred, and you should consult your broker to discuss these differences, before submitting any loan application.
- PROPERTY – The location, size, type and purchase price of the property can all impact on your ability to qualify for a loan. Some banks won’t lend in certain postcodes, others won’t lend for properties less than certain square metreage, most studio apartments and company titled properties, or properties valued well below the purchase price paid.
- CREDIT SCORE – A bad credit score can cost you dearly in any application for Melbourne Home Loans. If your credit score has been impacted by past activities, your Melbourne Home Loans Broker will assist you to find a lender that does not place such a heavy weighting on your current credit score.
- ASSETS and LIABILITIES – Most lenders carefully examine assets held and liabilities incurred as part of their assessment of your worthiness as a borrower. As lenders now have access (under Comprehensive Credit Reporting Requirements) to all of your existing credit liabilities and the state of each account, it is vital that you do not fail to disclose any liabilities in the statement of liabilities provided as part of your loan application.
- SAVINGS – Evidence of genuine savings amounting to five percent of the property purchase price is required by most lending institutions, especially if the loan to property value ratio is in excess of 80%.
- LOAN to VALUE RATIO – Most lenders in the Melbourne Home Loans market will only lend up to 80% of their valuation of the property, against which the loan will be secured. Those willing to lend at higher ratios, will generally (some professionals and those employed in certain industries are given exceptions by specialist lenders) require the borrower to pay expensive Lenders Mortgage Insurance on their behalf, as a condition of granting a loan.
- PURPOSE – Owner Occupiers face an easier path than investors when it comes to applying for a mortgage loan. Investors generally face higher interest rates and additional security requirements.
Oz Lend are experienced and trustworthy Bentleigh and Moorabbin Area Mortgage Brokers who specialise in Melbourne Home Loans for any local resident who need the services of a Melbourne Mortgage Broker. Call Vlad on 1300 438 669 to book an appointment to discuss your specific requirements.