Observation
re: my loan balance is getting bigger
It is not necessarily having a larger loan balence , it also includes the lvr and the how secure/reliable the income stream that services the loan is . If a person is on a high income and the industry they work in , goes belly up , the most likely situation is that they get a another job , probably paying a lot less in some other industry.
The bank would use this to determine the risk situation. A person needs to consider , what would u do if u lost ur job, how quickly could u get another one. Does a person have a cash reserve of say 6 months payments + expenses ? - to handle the situation where a person looses ur job or a person may be sick / have accident etc
Banks do put their customers into slots. Net worth and income/profession ( plus how profitable you are for them ) would be obvious characteristics. Another large investor remarked to me a few years ago , that the transition for him was based on his loans being > 1m.
Why not ask the loans officer , what the criteria is for this new service - they should be able to say something like , loans above $x etc, etc . However, u may not get a straight answer - i have not been able to.
When u start to owe a lot of $, the bank will conduct regular reviews (maybe once a year) , which they use as a method to formally monitor the risk situation. Maybe like , ur income stream changed ( lower paying job/ unemployed ) , expenses increased - for whatever reason.
My brother is a farmer, and he told me some time ago , that the bank officer will simpley tell you, you need to change this , ie debt level , lvr, sell this, etc, etc If they though u where pending bankrupt, they would be asking u to liquidate assests to repay the loans .
So , i would plan how i would handle, extended period of no income, say 6 months plus other situations. If a person ilustrates how they would handle the risks, and has a cash reserve, it would make the assesing person a lot more comfortable.
Note the above comments are based on my OWN experiennce and observation and could be rather incomplete.
