“Risk assessment” is a term used mostly across the finance and banking industry. It’s usually used when determining the likelihood of loss on an asset, loan, or investment. Assessing risk is an essential part of determining how worthwhile it is for the lender to invest in an applicant. The lender also needs to find the best process for mitigating the risk associated with the investment. We spoke about a similar topic last week: “How will my lender assess my application?”.
The main way a lender conducts a risk assessment is to carry out a credit check. It’s common for lenders not to approve borrowers with scores below 600 as lower scores are indicative of poor credit practices. They also take into consideration available investments, collateral property, income and cash on hand 😅.
Some lenders also specialise in different kinds of risks, so your unique situation doesn’t always have to mean you can’t get into your own home, sometimes there is a solution 🧐!
Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.