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Mortgage Basics

4 Cs lenders look at when assessing a loan application

Ever wondered what your lender is looking for when approving your loan.

Here are the 4 C’s major banks will scrutinise during your application:

1. Character

Credit History

Lenders will always consider your credit history. They will be interested to know what your track record for repaying debts looks like.

This check will be undertaken with one of the major credit companies and includes details like past debts, how much those debts were and whether they were paid back on time. This information forms your credit score which will also be shared with your lender.

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2. Capacity

Lenders want to know how much you can realistically pay back without feeling overwhelmed.

To do this they will assess your debt to income ratio.

At the same time, they will also look into how stable your current role is, including length of time in the role, and assess the risk of you losing your job during the loan term.


3. Collateral


If you have any assets like cars or shares these will help you secure a loan.

This collateral will give the lender confidence that if you are to default on your loan they will be able to repay back some of the costs with these items.

4. Conditions

Conditions refer to the finer details of your loan!

Your lender will assess the term, interest rate, and your deposit.

They will also assess the intention for the loan which is very important to them! This gives them an indication of whether you have structured goals.



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