I have dealt with many clients over the years that have had a long-standing relationship with their current lender. However, when it has been time to apply for a home loan, the lender is unable to approve their finance.
Why is this so?
Different lenders have differing policies when it come to assessing home loan applications and depending on your current situation, there may be another lender who is able to assist due to their policy niches.
Three of the most common policy differences between banks and lenders are listed below.
If you are self-employed, the majority of lenders require 2 years financials/tax returns to determine your taxable income. This is often done by averaging the 2 years figures, which can be detrimental if your most recent year is far better than the previous.
By comparing lenders, you may find that applying for a home loan with a bank that only requires the most recent years financials is beneficial. If you have made the most money in the most recent financial year, this will help your borrowing capacity if the bank only requires the one year.
Most banks will require an applicant to be at their current place of employment for a minimum of 6 months, preferably 12 months+. If you are newly employed and having trouble obtaining finance, it may be worth exploring other options as there are banks that will approve home loan applications regardless of the length of time at your current workplace.
Overtime for servicing
Many industries require employees to work overtime and can also be paid allowances for working certain shifts and certain days of the week. This type of income can be required to service a home loan if you are in this type of arrangement. If this is the case and your current lender will not recognize your overtime income it may be time to look elsewhere. There are many lenders that will consider this type of income for servicing.
If you are having difficulty obtaining finance with your current lender, please call Ashley on 0425 826 967 for assistance.