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How Bank Lending Practices Have Tightened During COVID-19

By May 29, 2020 No Comments

We all know that the coronavirus is having a devastating effect on, not only the Australian economy, but the world economy. In April we saw job losses and business shutdowns like we have never seen in our lifetimes. This stuff is unparalleled… A pandemic?? is this real?! Over the days that followed, reality started to sink in for us – what did it mean for us and our loved ones, then for our clients and our business. My first thoughts centring on how do we help? My answer – be here, be present and deal with every client in need and their lender on their behalf and we managed to do that and sort great outcomes.

Now, for people looking get a new loan or refinance it’s important to understand how lending practices are changing amid COVID-19, here are some key points:

  1. Job security has never been more important;
  2. Home valuers are being very conservative;
  3. Mortgage insurers are being very conservative.

In need of a loan? Here’s how to increase your chances of getting a loan in these unprecedented times:

  • Save money and watch your expenses closely. Buy what you need, when you need it, don’t get sucked into online impulse spending, lenders do not look upon it favourably.
  • Make a budget and stick to it. Banks will be vigilant in reviewing all income and expenses. They also have very reliable data on your financial activity so you wont be able to hide any unwise debts or expenses.
  • Try and create a buffer in your financial position. Lenders like to know that even if your income drops by 20% you can still live and meet your loan repayments.
  • Make sure all your information is well presented and comprehensive.  If your loan application demonstrates that you have secure income, you operate to a budget, some solid savings and a plan for managing your finances, lenders should look upon you favourably.

In the end, your ability to get a loan is going to come down to how much risk a particular lender is willing to take on, whether you are a new or existing client and whether the lender is taking a short or longer term view for their new and existing clients. Our experienced team can help navigate the process, negotiate with lenders and do the legwork on your behalf. Partnering with FirstPoint will give you confidence that you are being looked after by Southern Sydney’s preeminent mortgage broking practice.

For a confidential, no obligation discussion, please contact us on 02 9527 2230.

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