When writing a loan, you are in effect painting a picture. The bank and the banks mortgage insurer do not know the borrower from a bar of soap. The old days of banking history and a relationship with a particular bank are long gone.
We must paint this picture, highlighting the borrower’s strengths and more importantly addressing any possible or perceived weaknesses. The loan assessor does not know the borrower and due to the sheer volume of applications that pass their desk we must ensure we attempt to address all issues at the start.
This gives the bank to assess the application once, value the related properties and then if necessary recommend it for approval with their mortgage insurer.
Not all applications are perfect, in all honesty few are. Whether it be due to credit history issues, short term employment, a lack of residential stability or just glitches in the borrowers account conduct.
Any such item if left unaddressed is leaving the bank/lender every opportunity to decline the loan application.
Each lender views things differently and not everything can be known up front so there is plenty of room for a loan application to be declined or just put on the back burner until additional matters are addressed and resolved.
Another regular issue of late is the bank property valuations sometimes coming in lower which can cause issues with a clients borrowing capacity. In the end it doesn’t matter how high your income is if you don’t have a large enough deposit or sufficient enough equity in your current property. This type of issue can really snowball if a client has multiple properties.
In the end the bank is looking at worst case scenario with all aspects of the application. You might think it cynical but in the current market the lenders are almost looking for ways to decline loans. This way they just get to have the cream of the crop on their loan books.
Part of my job, as specialist mortgage broker, is to educate the borrower/s to be realistic and more importantly open and honest about any issues they may know of. Having the opportunity up front to be fully informed and perhaps make a different decision with a lender makes the world of difference. Being on the back foot is not a good thing and having to approach another lender and explain why the borrower didn’t proceed with their original application can sometimes be quite ‘interesting’.
Ask me a direct question and I’ll certainly answer in kind, the more upfront we are with each other, the better the relationship going forward. I’ll give you my thoughts and opinions which will help you make an informed decision. In the end that’s what most people want.