The conditions necessary for a loan request. Before granting a loan to an individual, the banking establishment checks whether the applicant fulfills all the conditions of acceptance. For this, it considers a certain number of parameters such as the ability to repay. The borrower must therefore provide some documents proving that he is able to calmly settle his monthly payments.
Have fixed and regular income
In order to get a loan from a bank, it is necessary to have fixed and regular income. Indeed, financial stability is one of the essential criteria for most banking establishments. Financial organizations require stable employment, an open-ended contract, or employment in the public service providing a fixed monthly income. To prove this financial stability, the lender often asks the borrower to provide the statements of his bank account for the last 3 months.
Have low debt ratios
In order to properly determine the creditworthiness of a borrower, the lender will study its debt ratio. Generally, banking establishments use the 33% rule. This means that the debt ratio must never exceed 33% of the applicant’s monthly income. For example, if the latter receives a sum of $ 2,000 per month, he will not be able to contract a loan exceeding $ 660 per month (33% of the $ 2,000).
Have a personal contribution
In the context of a mortgage, the personal contribution is also a determining factor. In general, it is valued at an average of 10% of the overall amount of the value of a property, for example. Management and notary fees are included. To easily obtain a mortgage, the contribution must represent 20 to 30% of the amount of the purchase. Like the consumer credit rate rule, personal contribution is not often an essential parameter. This varies depending on the borrower’s “living amount”.