Personal questions brokers ask before approving your home loan

Personal questions brokers ask before approving your home loan

Kathryn Lee - 8 Nov, 2019

In light of the recent banking royal commission, mortgage brokers are warning loan applicants to expect some intrusive questions in their home loan assessments.

Big banks, as well as small lenders, have made the decision to buckle down on verifying the income and spending; leaving applicants confused and even emotional.

According to Lendi, this scrutiny took a steep rise during the banking royal commission. Before the commission’s public hearings, additional information was only requested from 40% of applicants.

After the release of the commission’s final report in February – a report which exposed poor lending practices – that figure rose to 67%.

It seems no stone has been left unturned and consumers are calling the new normal invasive.

Here is what personal questions you can expect based on the accounts of recent home loan applicants.

What do lenders want to know?

A Netflix account, gym membership or meal plans are among some of the expenses which can now contribute to a home loan rejection.

These periodic payments can add up and understandably are lumped into your expenses.

But now, potential borrowers are being asked to divulge even their smallest household costs including daily coffees or lawn mowing.

The Four C’s of home loan approval

Most banks and lenders have a list of standard criteria that they use when assessing your home loan application including:

  • Credit History – How risky is it to lend you money? Have you had a hard time paying bills in the past? (Sometimes included in the character test.)
  • Cashflow – What money comes in and out of your accounts each month? What is your income? Do you have other loans? What are your living expenses?
  • Collateral – If you default on your loan, is your property going to be easy for your lender to sell?
  • Character – What are you like (as a person)? Are you the type of person who is going to actively work towards paying off the loan?

Do you own any pets?

While having financially dependent children is a foreseeable line of questioning, ‘dependents’ has now extended to mean pets for some lenders.

If your bank statement shows a transaction from a pet store, this might prompt a bank to ask how many pets you care for. Noting that a single dog or cat comes with a $25,000 bill in its lifetime, having a few may justify this concern.

Do you gamble?

Betting habits or even the occasional wager has attracted the attention of many lenders recently.

And for those thinking that cashed-based betting might be a loophole, think again. The increased scrutiny extends as far as large cash withdrawals, which some lenders consider an attempt at hiding gambling habits.

On one occasion, a young man was targeted for withdrawing a large sum of money from an ATM near a casino. It was later found to be given to his mother, but this case became an example of the lengths banks were willing to go to in order to expose a gambling habit.

Do you have a gym membership?

While they may keep you healthy, gym memberships are yet another expense lenders worry about. Gym expenses can add up fast, putting doubt as to whether you’ll be able to afford your mortgage, so don’t be surprised if your broker asks you to quit the gym before giving you home loan approval.


Do you subscribe to any streaming services?

Although they are a massive part of a modern lifestyle, your subscriptions to streaming services such as Netflix, Spotify, Stan and/or Apple Music might be affecting your mortgage application. These expenses add up, especially if you are subscribing to more than one. If you can swing it, consider cutting back to improve your application success.

Are you trying for a kid?

It’s a question to avoid asking at dinner parties but, in a home loan assessment, nothing is out of bounds.

One applicant was accused of hiding a child after a lender noticed a purchase at a baby store. Although it was a gift, this type of shopping may spark questions.

In July, Naomi Chatelier told Domain she had been questioned on her IVF treatment after payments appeared on her bank statements. Ms Chatelier was asked if she intended on freezing her embryos “in the next five to 10 months” and was told that her loan would only be assessed on her husband’s wage.

She became so emotional during the interview she left crying. With her initial application rejected, she made a complaint and proved that she would be able to service the loan on maternity leave – even though she wasn’t pregnant.

Can you salary sacrifice a mortgage?

If you’re saving for your first home or wanting to boost your retirement savings, salary sacrificing could help put money back into your pocket.

Are you returning to work after parental leave?

If you’re on parental leave, you may also need verifiable proof that you’ll be returning to work after your time is up. Even if you’re a two-income household and the loan is serviceable on one income, some lenders have still requested proof before giving home loan approval.

Is your phone on a plan?

Phone plans usually span somewhere between 24 and 36 months; a long time in the eyes of your lender, meaning it might be scrutinised with your application.

Do you eat out a lot? (Or order regularly order UberEats?)

We get it, eating out is social – and UberEats is just plain convenient. However, do these things too often and your mortgage application assessor might start to see red flags.

Credit cards

Even if you don’t use it, credit cards have limits – and this is what lenders worry about. Having an emergency credit card with a limit of $10,000 is a red flag in the eyes of your lender, because what’s to stop you maxing it out tomorrow?

Health insurance and medical expenses

Often lenders will want to know any medical expenses you incur (besides anything bulkbilled) such as your private health insurance, specialist expenses, dental costs, optometry, etc.


Private school fees

Education can be a costly endeavour, especially if your kids are at a private school. According to data from Monash University, school fees from a top private school in Sydney can total almost $500,000 over their 13-years of schooling. Add another kid to the mix and the figure doubles, so it’s no wonder private school fee expenses can catch the attention of lenders.

Random spending

What may pop up in an interview is truly unpredictable at this point. One individual was questioned on his trip to a gentleman’s club for a buck’s night, while another was questioned for an odd repayment of $50 to his mother.

For the better?

Figures from Australian Prudential Regulation Authority (APRA) has also revealed growth in new loans has taken a hit. A year ago, growth sat at 6.6% and earlier this year that figure dropped to 5.8%.

These numbers beg the question – has it become harder to secure a loan?

Although the change has meant applications are taking longer and the chance of rejection is higher, some experts have supported the move.

AMP Capital chief economist Shane Oliver told Domain:

“It could be more beneficial if borrowers are forced to think about their true ability to service a loan.”

“It could result in them ending up with a product or a loan that is more appropriate for their financial circumstances.”

Words by Michelle Elias & Kathryn Lee

Looking for a home loan but don’t know where to start? Contact eChoice, and we’ll introduce you to one of our brokers who will be able to guide you through the process and find you a great deal.

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