How Banks Assess Your Loan Application
Christian Stevens, Mortgage Broker
Published December 4, 2025, 1:19 P.M
Learn How Banks Assess Your Loan Application, including income, expenses, credit history, and borrowing power. Discover tips from Flint Group Australia to maximize approval and find the best home loan solutions for your needs.
Key Facts
- Banks evaluate home loan applications using a detailed assessment of income, expenses, credit history, employment, and overall financial stability.
- Borrowing power is calculated using a stress-tested serviceability rate, often higher than the advertised loan rate, to ensure repayments can be comfortably managed.
- Your credit score, existing debts, savings habits, and employment type directly influence approval decisions.
- Lender policies vary, so not every application succeeds with every bank — which is why working with Flint Group Australia ensures your application aligns with the best lender criteria.
- Flint guides borrowers to prepare and optimise their applications for loan approval, offering advice tailored to their financial profile and goals.
What Do Banks Look for When You Apply for a Loan?
Lenders want assurance that borrowers can manage repayments responsibly.
Key factors they review include:
- Income: salary, bonuses, rental income, and government payments
- Expenses: daily living costs, rent, school fees, transport, subscriptions
- Debts: credit cards, personal loans, BNPL services, HECS/HELP debts
- Credit history: repayment behaviour, defaults, credit score trends
- Savings and deposit: genuine savings, gifted deposits
- Employment stability: full-time, part-time, casual, or contract roles
By understanding these, you can position your application for optimal approval with Flint’s guidance.
How Serviceability Works
Serviceability is how banks determine if you can afford a loan safely.
It involves:
- Calculating your after-tax income
- Accounting for existing monthly commitments
- Stress-testing mortgage repayments at 2–3% above the actual interest rate
Example: A 6% home loan may be assessed as if it were 8–9% to check your ability to manage future interest rises. This ensures lenders are confident you won’t default under small rate changes.
What Is a Borrowing Power Assessment?
Borrowing power represents the maximum loan amount a lender will approve, based on:
- Income and dependents
- Expenses and liabilities
- Loan term and current interest rates
Each lender has a unique calculation method. With Flint Group Australia, you get expert advice to maximize borrowing power and access the best home loan solutions for your situation.
What Can Impact Your Approval?
Certain factors can reduce borrowing power or trigger conditions:
- High credit card limits (even if unused)
- Multiple recent loan applications
- Irregular employment or casual work
- Unexplained account deposits or withdrawals
- Minimal genuine savings
Addressing these factors with Flint’s expert guidance can significantly improve approval chances.
Tips to Strengthen Your Loan Application
- Reduce or pay down credit card balances
- Stabilise income (complete probation or contracts)
- Maintain consistent savings for 3–6 months
- Avoid large unexplained transactions
- Consult a broker to match your profile to lenders’ policies
These steps help ensure your application is positioned for success, unlocking home loans best suited to your financial goals.
📞 Want to Maximise Your Approval Chances?
Flint Group Australia helps borrowers:
- Analyze your financial profile from a lender’s perspective
- Prepare applications that meet lender requirements
- Find lenders with the best fit for your situation
Talk to Flint today and apply for your home loan with confidence, clarity, and expert support from Australia’s leading brokers.
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