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Questions a Lender Will Ask You and What You Should Prepare For - How much do you earn?

Pulling together the information for a loan application can seem daunting, and may even feel a little invasive.

 

If you’ve never applied for a loan before, gathering all of your most personal financial information – such as your credit card statement which reveals exactly how many takeaway coffees you’ve had this month – to hand over to a bank can seem daunting.

However, much like a trip to the doctor for a physical, a loan assessor has seen it all and chances are good that you’ll be well within normal spending parameters.

So, if you’re organising for your first loan application, it’s best to be prepared.

Here are some questions your lender will ask, and our best tips to ensure you’re ready to answer.

How much do you earn?

This is an obvious one and easy for you to confirm. Gather digital copies or print hard copies of your payslips.

The payslip should be no older than three months and should include a year-to-date figure paid.

If you have an irregular income, a letter from your employer clarifying your remuneration arrangements would be an excellent addition to include.

Additional income streams, such as rental income, investment or dividend income, or foreign income will also need to be demonstrated with at least three months of documentation.

This is the same for overtime and allowances, if these form part of your income, a minimum of 3 months history is likely to be asked for.

And if you are fortunate enough for your employer to pay you a bonus (or bonuses), then you will need a 2-year history of these for a lender to be able to verify this income.

If you are self-employed, then you’ll need to have your financial statements and personal tax returns at the ready for the last 2 years to be able to prove/verify your income from this source.

I know this all sounds like a lot, but being prepared is the key.

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Jason Gwerder
Friday, 18 June 2021


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