What Do Mortgage Lenders Look For?

Australian mortgage lenders primarily evaluate your serviceability, which measures your capacity to comfortably meet monthly repayments. They scrutinise your gross PAYG income, employment stability, and length of time with your current employer, typically requiring recent payslips and tax summaries. Lenders also apply a mandatory serviceability buffer—usually 3 percentage points above the loan's interest rate—to ensure you can afford repayments if interest rates rise.

Banks also conduct a detailed review of your living expenses, current debts, and credit history. They analyse recent bank statements to verify your household spending and examine your credit file for repayment history, active credit card limits, and existing liabilities like personal loans or buy-now-pay-later accounts. High unhedged credit limits or recent missed payments can directly reduce your borrowing capacity.

Your deposit size determines your Loan-to-Value Ratio (LVR) and overall equity position. A deposit of 20% or more avoids the cost of Lenders Mortgage Insurance (LMI). If borrowing more than 80% of the property's value, lenders require evidence of genuine savings held or accumulated over at least three months to prove financial discipline.

Because credit policies and borrowing capacity benchmarks differ substantially across Australian banks, a rejection from one lender does not mean you cannot borrow. A Lonix broker can compare options across various lenders, evaluate your financial position against specific credit criteria, and structure your loan application effectively.