In the latest issue of Your Investment Property magazine, Ben Kingsley and Bryce Holdaway from Empower Wealth share the 5 C’s of borrowing money in 2019. We touch on the highlights below:

1. Character
Character, from the way in which banks look at it, is all about assessing the features and traits that form your individual circumstances and situation. First and foremost, banks want you to be a secure and reliable borrower. They’re going to want to know: Are you stable in your job? Have you held good employment history? How has your credit history been over time?

2. Collateral
Collateral is all about the asset security, meaning that the banks protect their interests by securing their lending against a property or land. They do this by assessing the asset that’s underpinning the borrowing.

3. Capacity
Capacity is at the heart of why most people don’t get loan approval. This is all about your ability to repay the loan. This refers to the servicing, and the ability to service the debt. Each lender has a different servicing calculator, so this is why, in some cases, you get situations where one lender might say, “No”, but another says, “Yes”!

4. Conditions
Conditions look at the type of credit policy conditions that exist. This is dependent on the lenders’ criteria, which varies between each lender and means your application is assessed differently. For example, some forms of income may be accepted, but not others. Also, banks may have conditions around the length of employment, the types of properties they’re willing to secure against and so forth.

5. Common sense
 With the tightening of lending policy, it can be argued that this is happening less and less now. But banks do — or at least they should — use a common sense approach when assessing an application.

For the full story and deeper explanations of the 5 Cs, read the in depth article in the February 2019 edition of Your Investment Property. On sale at news agencies and Coles supermarkets January 10th to February 14th or download the magazine now.