Rise High Investor Weekly Video #25 3 Things banks look for when assessing your loan

1. Can You Afford the Loan?

Banks want to know if you can handle the repayments comfortably. Here’s what they check:

Your Income: They assess your earnings but often discount things like rental income.
Your Expenses: Banks estimate your expenses and may add a buffer for higher interest rates.
Your Living Costs: They’ll closely review your declared expenses, sometimes using your bank and credit card statements for verification.

Review your expenses and cut unnecessary costs before applying. This improves your affordability and strengthens your application.

2. Do You Have a Deposit or Equity?

Banks need to see how you’ll cover the difference between the loan and the total cost of the property, including fees like stamp duty. This can come from:

Savings: A cash deposit shows preparation and discipline.
Equity: Value built up in other properties can also be used.

Being clear on your funding source demonstrates that you’re ready to complete the purchase.

3. How’s Your Credit History?

Your credit history tells banks how reliable you are as a borrower. They’ll check:

Payment History: Have you paid your bills and loans on time?
Debt Management: Are you managing credit cards and loans responsibly?

Pay bills on time and monitor your credit score regularly. A clean financial record makes you a trustworthy borrower.