How much information can a bank demand when approving a home loan?
After a reader described her friend's experience with a Latvian bank requesting extensive documentation for a mortgage, an SEB representative explains what banks evaluate and why when deciding on home loans.
A reader named Zane contacted the LA.LV editorial team to share her friend's experience applying for a mortgage. According to Zane, her friend was asked for far more information than expected when applying at SEB bank, and ultimately chose to borrow from Swedbank instead, citing more favorable terms. Zane asked how much information a bank is actually allowed to request, and whether a client has the right to refuse providing certain documents.
What banks assess
Māris Opincāns, head of SEB's housing lending department, explains that when reviewing a mortgage application, banks evaluate not just salary but also other income sources, existing financial obligations, regular expenses, and information about owned properties. Since a home loan is a long-term commitment, the bank needs a clear picture of the client's ability to meet payments not only today but over time.
Why rental agreements are requested
If a client's income assessment includes rental income from another property, the bank may request the lease agreement to confirm that this income is regular. Information about other properties also helps the bank understand the client's overall financial position and total liabilities.
The right to refuse
Opincāns notes that clients formally have the right to decline submitting requested documents, but this may mean the bank lacks sufficient information to fully assess the application, and such cases are then reviewed individually.
Guarantors and additional collateral
Additional collateral or a co-borrower may be required when the primary collateral is insufficient or the client's income doesn't match the requested loan amount. SEB states that monthly payments across all credit obligations cannot exceed 40% of salary, and credit history, maintenance costs, and alimony payments are also taken into account.
The SEB representative stresses there is no basis to claim that mortgage lending conditions have become stricter in recent years — lending still follows responsible lending principles. Interest rate differences between banks stem from differing risk assessments, funding costs, and each bank's own pricing policy, so comparing offers from multiple banks is advisable.
