We’re often asked by clients what questions the banks will have as part of the mortgage application process. The questions asked and the information required tends to be the same from one bank to the next, however there will be slight differences as each bank has its own criteria and appetite for lending. Here we cover the main six questions that banks will ask as part of your mortgage application and why!
What is your income?
The bank is lending you a large sum of money; understanding that you have enough income to make the monthly mortgage repayments is obviously something they need to know.
Your income, however, doesn’t always mean your salary. Lenders will be able to take many other things into account, such as any housing allowance that is offered by your employer, or regular commission and bonuses that you are paid for hitting targets.
Mortgage lenders will assess the risk of each type of income and build an overall picture of the money you have coming in based on it. A regular salary in an established job, for example, is considered lower risk and will be taken into account in full, whereas a target-based sales commission is much higher risk and it is likely that only a percentage of it will be considered.
We work with a range of lenders to find the mortgage deals that are suited to your situation and that includes understanding which banks are more likely to assess your income as lower risk than others.
Your income level also determines the size of mortgage you can expect to get, and thus your overall purchasing power.
What are your outgoings?
Just as important as your income are your regular outgoings. By subtracting your outgoings from your income, the bank is able to make an assessment of your overall affordability.
Banks apply a stress test, which involves determining if you can still afford the mortgage repayments if things change – such as interest rates rising.
Your financial commitments, like personal loans, car loans and credit cards form a substantial part of any stress test, and it’s advisable to ensure you are eligible before making a mortgage application. It is worth speaking to a mortgage consultant as they will be best able to advise on what would have the most impact on your affordability.
What type of property are you purchasing?
Are you looking at an apartment or a villa? Is it off-plan or already on the secondary market?
It is important to remember that the property itself is the lender’s ultimate security against possible defaults.
Further, some banks work on a listed property basis only, limiting their lending criteria to certain areas or property types.
Do you have your down payment and where has it come from?
While not all banks ask this question, as your mortgage advisors, we will always do so. Understanding that you are ready to purchase with your down payment accessible is an important stage.
Lenders may also wish to know the origins of your down payment, to ensure that there is no undisclosed debt and that no third party can lay claim to a share of the property.
What are your personal details?
The bank will be keen to determine your financial standing and history. It is normal that you will be asked to share the following:
- Current address
- Family status and information about any dependants
- Employment status and employer (where applicable)
- Any other business interests
This information will be used to determine whether you fall within the banks lending criteria. As mentioned previously, different banks will have different criterias and appetites for lending.
Further, your nationality will also determine how much you can borrow. In the UAE, non-UAE nationals can borrow a maximum of 75% of the property value whereas nationals can borrow up to 80%.
Are you self-employed?
If you are self-employed or the owner of a company then the lender is going to be interested in your business and its viability. It is very important to them that your employment situation is secure and that you will not struggle to make mortgage repayments.
They will be looking for information on:
- The business turnover
- Net profit
- Market sector
- Size of business e.g. employee numbers
In some cases, the bank will be looking for up to three years of detailed accounts for your business.
Remember, they are trying to assess your suitability for significant credit and any business you are invested in forms part of that picture.
Help from Mortgage Finder
With expert advisors and specialist knowledge of the lending market across Dubai and the UAE, at Mortgage Finder we can help increase your chance of a successful mortgage application and to maximise your purchasing power. By choosing us, you gain access to the widest network of lenders and can tailor your application to the bank that best suits your personal situation.
We understand each bank’s specific preferences, and will make sure you avoid rejection from lenders with criteria that is unsuitable for you, improving your chances elsewhere.
Fill in our contact form for more information, or give us a call today!