Brokers know how lenders assess applications and can help connect you to the lender best suited to serve your mortgage needs by shopping around on your behalf.
In order to decide whether or not to provide you with a loan, lenders will generally assess you against five qualities.
- Your ability to repay the loan. To establish your capacity the lender will look at your employment history and salary to evaluate whether you have enough cash coming in reliably to pay the loan over time.
- How much cash you have up front. Assessing your ability to put down a percentage of the value of the property being purchased up front is standard. The percentage varies though, and some specialist lenders may approve a five per cent deposit.
- The property valuation. Since the property is used as collateral if you are unable to repay the loan, the lender will value the property. Based on the report, the lender will decide whether the property is worth the loan being approved.
- Your financial history. Your credit rating, expenses, debts and credit cards will help the lender assess your reliability as a borrower and whether you are worth the risk.
- Market conditions. Economic circumstances in the market can influence what interest rate you have access to and whether you need to provide extra security. They can also influence the repayment schedule.
The Finance Broker advantage
While loan officers work solely for a lending institution and can only offer that institution’s products, a Finance Broker such as myself is able to shop around for you and help you increase your borrowing capacity.
Finance broker are paid commissions by lenders to match borrowers to the right products and can negotiate a very competitive rate on your behalf. This is why half of borrowers today turn to finance broker when it comes to finding a home loan.