Since 14 December 2017, The Royal Commission into misconduct in the banking, superannuation and financial services industry has brought about sweeping changes when applying for a home loan.
In essence the government has an initiated an investigation into how reputable banks and financials services providers have been operating.
As a result of this investigation there have been 3 major changes to how banks assess your home loan application.
So they can understand your living expenses, banks now require a detailed budget from you outlining how much you spend on the following
The banks will review what you spend every month, to calculate if you can afford the loan you are applying for.
They work your repayments out at based on an interest rate of 7.15% or more (whilst your actual home loan rate may be closer to 4%) to ensure if interest rates do increase, you can afford the repayments.
Banks are now taking the time to review your everyday spending account. Banks will often request a copy of the last 3 months statements of your spending account, to check
If you can have your everyday account in order and matching your budget in the last 3 months prior to approval, it will greatly enhance your chances of approval.
Given most home loans are over 30 years, banks will often want to understand how you are going to pay off your home loan if you’re 45 years of age and applying for a 30 year loan.
To satisfy this requirement and show you won’t be in financial hardship when you retire from work, the bank may rely on
With all these changes, its best to speak to a broker well before you intend to purchase.
By addressing this ussues you will
We hope this has been of assistance. If we can assist at all in the future, please contact us on 07 3268 7493. There are home loan rates from as low as 3.59% currently, if you’d like your home loan reviewed.