A quick word about slow approvals

Many of us still assume a new loan or a mortgage refinance can be waved through in a day or two. The bank wants your business, right?

But it’s not quite that simple.

These days you can expect any new lending, or even a re-fix, to take ages to be approved. And there may be a nasty sting in the tail – where the bank declines to lend you the full amount you’ve applied for.

Here’s why this happens – and here’s what you can do about it.

Tip 1. Expect more paperwork.

Banks are now required by law to prove you can afford your loan. As a result, they are requesting more information about your income and expenditure.

So you may be asked to supply months of payslips, or annual accounts if you’re a business owner. The bank will scrutinise these in detail. Don’t rock up with one payslip and assume you can charm the bank into signing off the loan. They will simply put your approval on go-slow.

It doesn’t matter how long you’ve been with them. There are no shortcuts.

Tip 2. Check your spending before the bank does.

Banks also need to see you’re a solid citizen who can handle repayments. They will ask for months’ worth of current account and credit card records. If they see lots of withdrawals at the bottle store or casino, your ability to borrow may be constrained. 

Now, we’re not here to be the fun police. We believe how you spend your money is up to you, but as mortgage advisers we are now all forced to make it our business. We simply want to let you know what could cause a bank approval to be scrutinised even further.

Tip 3. Get your loan prepped before you do anything else.

You can avoid most of these hassles if you get your finances in order months before you need to take out a mortgage, refix or refinance.

That’s why we advise all our clients to talk to us well before they need the money. We will go through the lending process with them to highlight any issues the bank is likely to have. 

It’s a free service – and it could save you a lot of time and trouble when it’s time to do the deal.