Wondering why your bank's credit decision is taking so long? Often, this is due to missing or incomplete documents. This guide will show you how to correctly compile all the documentation from the start, thus shortening the process by weeks.
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The topic briefly and concisely
Complete and accurate documentation can reduce the duration of the credit decision process by up to 40%.
A professional market value appraisal is often crucial for securing the desired loan amount and speeding up the process.
Banks assess not only the income but also the debt service capacity, where the instalment should only account for about 85-90% of the disposable income.
The path to owning your own property is paved with anticipation, but also with administrative effort. One of the biggest hurdles is assembling the precise documentation for the loan decision. Banks assess each application based on over 50 individual criteria to evaluate the risk. An incomplete application can not only lead to delays of several weeks but, in the worst case, to rejection. With perfect preparation, you not only accelerate the approval but also improve your negotiating position for interest rates. This article guides you through all the necessary documents and explains why each one is important for the bank.
The Foundation: Why Complete Documentation Dominates the Process
Banks allow no room for uncertainties when granting loans. According to the Mortgage Credit Directive, they are legally obliged to carry out a very thorough examination of your creditworthiness. An application is only processed once an average of 15 to 20 different documents are available. If even one document is missing, such as the calculation of living space, the entire process is halted. This costs you an average of 5 to 10 working days. Therefore, the completeness of your documents is not an optional extra, but a fundamental requirement for prompt processing. Good preparation also signals professionalism and reliability to the bank, which can positively affect the assessment by the bank. The precise preparation of all evidence is the first step towards successful financing.
Your personal business card: Credit documents as a token of trust
Your financial reliability is crucial for the bank. Your creditworthiness, meaning your ability to repay on time, is assessed based on your personal documents. A positive SCHUFA score is just the beginning. Banks require proof of income for the last 3 to 6 months to verify stable earnings. The latest income tax assessment, not older than 24 months, provides insight into your overall financial situation. For a seamless review, you should have these documents at hand:
A valid ID card or passport copy
The last three payslips (for employees) or pension statements
Most recent full income tax assessment
Proof of capital (account statements, deposit statements)
Information on existing credits or liabilities
For self-employed: Business evaluations (BWA) for the last 2-3 years
These documents are the backbone of your application and demonstrate your financial stability. Comprehensive documentation immediately creates trust with financial institutions and prevents queries that could slow down the process.
The Value of Security: Why Property Documents Are Essential
The property itself serves as the primary security for the loan for the bank. Therefore, its value is meticulously examined. A central document in this process is the current land register extract, which reveals encumbrances such as rights of way or rights of residence that can reduce the value by over 15%. An informative market value appraisal is often the key to the approval of the desired loan amount. It provides the bank with an objective and comprehensible assessment of the property. If such an appraisal is missing, the bank often commissions its own internal appraiser, which can delay the assessment by up to three weeks. With a professional appraisal from Auctoa, you significantly speed up this step. Use our financing calculator to gain preliminary insights. Thus, precise documentation of the property's value is essential for the next phase.
The cornerstone of financing: debt servicing ability and equity
The bank must ensure that you can sustain the monthly payments even in the long term. For this, what is known as the capital serviceability is calculated. Here, your monthly income is compared to your expenditures, with standard living costs estimated at 800 to 1,200 euros per person. The remaining amount must exceed the future loan rate by at least 10-15%. Proof of equity is another critical aspect. Banks generally expect an equity ratio of at least 10-20% of the purchase price. The following proofs are required for this:
Account statements from savings, instant access, or fixed-term accounts from the last 3 months.
Securities account statements showing the current market value of shares or funds.
Building society contracts with current account statements.
Gift certificates or proof of an already paid-out inheritance.
A solid proof of equity reduces the bank’s risk and significantly improves your chances of obtaining a favourable property financing. These figures underpin the feasibility of your financing plan.
Special Cases in Focus: Additional Documents for Landlords and Heirs
Not every financing follows the standard process. If you are purchasing a rental property or acting as a community of heirs, the bank will request additional documents. For rental properties, rental income must be substantiated with tenancy agreements and bank statements from the past 6-12 months. The bank will assess the sustainability of the income. For communities of heirs, a certificate of inheritance is absolutely necessary to clarify ownership rights. Often banks also require the consent of all co-heirs for financing, which can extend the process by 4-6 weeks if communication does not proceed smoothly. Early resolution of these points is crucial to avoid delays and meet the specific requirements of the bank. Professional financing advice can provide clarity here.
Conclusion: Achieving a Quick Loan Approval with Precision and Completeness
Compiling the exact documents for the credit decision is not an obstacle, but a strategic task. A comprehensive and professionally prepared documentation can reduce processing time by several weeks and significantly increase your chances of obtaining top conditions. From personal creditworthiness proofs to detailed property documents and the crucial valuation report – each document matters. Investing 8 to 10 hours in preparation pays off multiple times. Consider compiling your documents as the first and most important step on the path to your new home. A precise application is the fastest route to success.
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Additional useful links
The Wikipedia offers a comprehensive article on creditworthiness, a central aspect when granting credit.
FAQ
Why does the bank need so many documents?
Banks are legally required by the EU Mortgage Credit Directive to conduct a very thorough assessment of the applicant's creditworthiness. The documents serve as proof of income, assets, and the value of the property to minimise the bank's risk of default.
What role does the SCHUFA score play?
The SCHUFA score is an initial indicator of your payment behaviour and thus your creditworthiness. A good score is a basic requirement, but the bank also examines all other financial details based on the submitted documents.
What happens if I can't provide the documents?
If documents such as old building plans no longer exist, you should proactively discuss this with the bank. Sometimes, alternative documents or a statement may suffice. However, for essential documents like proof of income, obtaining them is indispensable.
How current do the documents need to be?
Most documents should not be older than three to six months. This is especially true for payslips and bank statements. The land registry extract should also be as up-to-date as possible, ideally not older than three months.
Does a broker speed up the submission of documents?
A good estate agent can help you quickly obtain property-related documents such as the land register extract, site plan, and declaration of division. However, you are responsible for your own personal credit documents.
Can I speed up the process if I am already a customer of the bank?
Yes, as an existing customer, the bank already has some of your data on file, which can speed up the process slightly. However, you must submit all current and object-specific documents in full, as each loan is reviewed independently and uniquely.
