Let’s be honest. You don’t need me to explain finance as you’ve already got Google plus that one friend who read half a blog post and now hands out loan advice like it’s insider trading.
However as an accountant who knows a bit of finance and a mortgage broker who knows a bit of business, I can tell you this “There are a few things that actually matter”
Income/Profit : The Magic Number
Not potential nor what you could earn one day and definitely not the version after creative explanation. The boring taxable version, the one the ATO already knows about and that is the number banks care about.
For employees, it is payslips and tax returns. For business owners, it is consistent profit that does not look like a rollercoaster. One good year means very little but boring and repeatable always wins.
LVR: Bank’s Favorite Acronym
Loan to Value Ratio is simply how much you put in versus how much the bank risks.
At 80% you look sensible, at 90% it starts getting risky and at 95% it may still be possible but all the best with extra scrutiny and very little room for error. The higher this number goes, the tighter everything else becomes.
Total Debt: Elephant In The Room That You Don’t Want To Talk About
Every loan you already have matters. Car loans, HECS, personal loans and even that credit card you swear you never use. If you have borrowed it or could borrow it, it counts.
Age: No Its Not Just A Number
At 22 you are too young and unstable, at 45 you are in your prime but what if you lose your job, at 65 you are too close to retirement. There is never a perfect age and the perfect time was always apparently last year.
Profession: Banks Do Play Favorites
Some professions get special treatment. Doctors are welcomed with open arms, accountants are reliable but slightly irritating because they read the fine print, builders are fine as long as their knees still work and influencers are thanked politely and shown the door.
In addition to all of that, the boring but crucial stuff matters too like savings, credit history, job stability, actual expenses, assets and even what you are using the loan for.
Everything else is just noise, so do listen politely to your friend’s secret formula if you like but when a loan application lands on a desk, Google searches and half read blog posts do not count. Finance is not about clever hacks. It is about boring numbers that actually add up.