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The Loan Interview & Compliance


In a loan interview with your customer, asking the right questions is the key to getting the right answers. The loan interview is so important because it is your only means of understanding the needs and requirements of your customer. Quality needs-based conversations are not only critical in ensuring you are doing the right thing by your customer, but are also essential to meeting your regulatory obligation under NCCP to ensure their loan is ‘not unsuitable’.

In this article, we look at effective questioning techniques and tools to assist you with your loan interviews. These include ways to build robust documentation and notes, and develop best-practice processes to ensure borrowers are issued with mortgages they can afford, both now and in the future.

Framing the conversation

Proper positioning of questions is an important factor to remember when conducting a loan interview. Framing the conversation by setting an agenda at the outset of your meeting is the perfect way to do this.

The loan interview agenda

Providing a loan interview agenda will let your customer know what you are going to discuss, and what you are going to do for them. It will explain that you are going to ask them some questions to fully explore their home loan needs and understand their financial position. This should help to make the interview run more smoothly.

As their broker, the loan interview allows you to tailor a financial solution that not only meets their goals and objectives, but also evidences that your client will be able to achieve their payment obligations without substantial hardship (as required by the NCCP).  Informing your client of the meeting’s objectives will also help to ensure that they provide you with their full co-operation.

Setting realistic time frames

It’s a good idea to set a realistic timeframe for your loan interview with your customers. With greater regulatory emphasis and requirements for robust affordability assessments, loan interviews with your clients can take more than an hour to complete. It’s important that both you and your client set aside enough time so that you can perform your due diligence thoroughly.  To help make the best use of your time, prepare your clients by providing them with the required information and be sure to inform them of the documentation they should have on hand before the interview. There are documents and questionnaires in Mercury that can assist you with this.

Interview tips and techniques   

There are lots of ways to go about conducting your loan interview. Here we look at some different questioning techniques that will assist you in having a robust needs-based conversation with your customer.

Open questions

Open questions are sometimes known as TED questions: Tell Me, Explain, and Describe. Using this kind of open question is a technique designed to prompt your customer to give you all the relevant information about the life event for which they are seeking funding.

For example: ‘Tell me about the house you’re looking to purchase?’

This simple question can prompt further discussion and raise considerations that may form part of the Preliminary Assessment, such as:

  • How will the property type affect your customer’s borrowing capacity?
  • Is the property located in a high-risk area?
  • Are there LVR restrictions relating to that particular property type?

Probing questions

Probing questions allow you to delve more deeply into your customer’s situation, assisting you to determine their financial situation, funding position and borrowing capacity. Probing questions are often more personal and will require a more sensitive approach, but they are necessary in order to help your customer meet their objectives and to establish that the loan is ‘not unsuitable’.

For example: ‘How much money are you able to save every month?’

Closed questions

Closed questions are questions which only yield a yes or no answer. In a loan interview, they can be used to confirm your customer’s understanding of the discussion and your understanding of their situation. At this stage of the loan interview, asking closed questions allows you to recommend actions and establish next steps in the loan process.  It will also show your client that you have been listening!

For example: ‘Would you like to proceed to a formal application now?’

Listen carefully

The key to an effective and compliant loan interview is to listen to your customers carefully and ask questions that are fit for purpose. The key to meeting your NCCP obligations is to document the interview and gather the necessary documentation that will form part of the Preliminary Assessment.  Ultimately, these actions will drive the process to create the most suitable lending solution for your customer.

Keeping notes

As a best-practice, be sure to make written notes and keep records of your loan interview, along with any research, inquiries and discussions with your client. It may be wise to make notes whilst you are actually interviewing your customer, rather than rely on your memory to write up what was said afterwards. Documenting your conversation is very important, especially if there are any variations sought by the customer.

For example: your client wants to purchase a bigger home. During your first meeting, your client tells you she wants to sell her existing property. During your second meeting, your client informs you that she has changed her mind and now wants to keep her existing property as an investment and rent it out.

As a best practice, you would have performed a scenario analysis with your client during the first meeting. After the second meeting the scenario has clearly changed, so you will need to do a new analysis including the possible cash flow outcomes that may arise from each choice. You will need to document your work at both meetings, keeping records of all your notes to explain how and why the situation changed.

Your customer’s best interests come first!

Finally, it’s important to remember there is a customer at the end of all financial transactions, and they must remain at the centre of everything you do. Sometimes clients may be time-poor or impatient during your loan interview session. If this is the case, persevere! It’s important to perform a thorough interview to make it possible for you to create a solution which is genuinely in their best interests.

To make things easier for you, we’ve provided a Loan Interview Guide on the Wiki to remind you of what needs to be discussed during your loan interview. Your Compliance Support Managers are also on hand if you require any assistance or have any questions. To get in touch, simply click your Help icon in Mercury or email us directly at We’ll be happy to help.