Utilising some of the guidance that PT_Bear has included in his post including that the C's consist of:
- Capacity to service
- Capital to contribute
- Collateral to provide
- Conditions
- Character
The first three are relatively objective, ie the bank can assess against some clear cut criteria (is DSR < 40% of Salary is Capital Less than X%), whereas Conditions and Character are more subjective - that is whilst guidelines would exist it - it is not as clear cut and is subject to some interpretation.
I dont work in a bank but I am just surmising that where a loan applicant is close to not meeting on of the first 3 criteria or even may not meet the criteria - aspect like conditions (job security, relationship etc) and character (ie strong financial history, good credit etc) may then sway the application if they are all okay as well.
So Alexlee comment
Alexlee said:
I dispute the idea that proof of character and integrity affects whether you get loans or not in the vast majority of cases. The rule book doesn't actually contain a lot of the rules people think are on it.
I guess we may need to hear from somone who is a lender for a bank to tell us what happens in real life. Because I believe that proof of character and integrity may effect whether you get loans approved or not.
Additionally, where Alexlee points out that the existence of low-doc and no-doc loans (where the borrower nominates their own income without verification) supports his theory. Alexlee if you provided details of your income for a low doc loan then they wouldnt need to ring your employer to verify the details you have provided. They did this because you were not applying for a low doc you must have been applying for a full doc and you were not telling the truth in the process.
Of course you like to think of yourself as having a strong character and integrity towards those you trust and respect and wont lie to these people in your life.
But from what you are suggesting, it is okay to lie to banks (or dime a dozen people you transact with) as long as you keep up your payments. In my book, this thinking is an extension of the thinking that someone who steals from a bank trust account - "it wont hurt - its just a faceless bank account and I will pay it back...."
When you do sign a loan application, you actually sign it that the details you have provided are true and in your case you are saying it is fine to lie and then sign a statement stating it is true...
Whatever the case, its your life and your loan applications and these are just my opinions - but personally I dont think that these actions are actions of integrity and I dont agree with it. And moreso, I dont agree for the young or new investors on the forum thinking it is okay to lie on a loan application to get your loan applications through.
Best wishes and respect
Corsa