For many borrowers – like you, the findings from the latest Banking Royal Commission are too complicated to understand. In a nutshell, it has uncovered some serious governance flaws in Australian Financial Institutions and their lending systems. The upside is that customers like you are now more protected than ever before, while the banks are being forced to be more accountable.
What you may not have considered, however, is how these changes might affect you when you need a loan or are looking to refinance.
The top 5 things you should know before you apply for your next loan
1. Your living expenses will now be under greater scrutiny
All the funds in and out of your bank accounts will be critiqued with an emphasis on how you manage your day-to-day living and household expenses. These historical patterns will be utilised in calculating your ability to service.
2. Loans are becoming harder to get
Historically, there was additional flexibility in satisfying lending criteria and applications may have been approved at the discretion of the lender. Such discretionary considerations will no longer be allowed unless there are adequate documentation and evidence to support the criteria’s requirements.
3. The property market is predicted to “downturn”
With fewer loan approvals and thus fewer house sales, average property prices are predicted to drop. While lower prices may be seen as good for you as a new buyer, remember that if getting a loan has been difficult for others in the market, it may be difficult for you too!
4. There are limited Interest Only Options
Principal and Interest loans are now the preferred option with financial institutions providing interest rate incentives to enter into structured repayments. Interest Only loans can still be secured if it is the most suitable product to meet your personal circumstances.
5. Cash Out is Restricted
In order to appropriately classify the purpose of the funds, Lenders will typically query “Cash Out” requests and may require specific information to support your application. Selecting a Lender with policies aligned to your “Cash Out” purpose may be key to obtaining approval.
How BCP Finance can help you get a loan
At BCP, we take the time to understand your personal circumstances, prior to submitting your application for assessment. We, the mortgage brokers behind you, look at your individual financial circumstances and recommend a solution best tailored to your unique needs. We will support you throughout the entire lending process and guide you on what documentation and evidence you will need to prepare to increase the likelihood of a successful loan application.
We will even help you in the three months before you plan to apply for a loan, to review your personal spending habits and will recommend the lifestyle adjustments you may need to make to optimise your lending outcomes.
In summary, you can expect an:
Ongoing commitment to provide personalised finance solutions.
Specialist loan advice.