CREDIT CRACKDOWN OPENS NEW DOORS FOR WOULD-BE HOME BUYERS

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has seen some
serious fall-out for prospective home buyers, with 40 per cent of home loan applications declined in December 2018, 32 per cent higher than the previous year.

While the big banks pick up the pieces and attempt to rebuild their fractured reputations, opportunists are getting their foot in the door as property prices fall as a result.

With the amount of would-be home buyers expected to rise, lenders are moving quickly to stand out against the rest, rethinking policy design and what “expectations” to the rules they will apply.

According to Lanie Conquest, director at Surf Coast Finance, promotional rates are coming down for some investment lending, fixed rates, lower loan to value ratios (LVR) and steady income customers.

The attention has shifted to the responsibility of borrowers in demonstrating their credit-worthiness.

Here are Lanie’s useful tips:
1. Proving sufficient cashflow Create a banking structure that separates regular commitments from discretionary spending and savings.

“The messier the cashflow, the more scrutiny will be applied to analysing living expenses. Banks won’t take any chances of being criticised for allowing unaffordable loans,” she said.

2. Credit history
Automate credit card and other loan repayments.

“Comprehensive Credit Reporting was introduced in July 2018, and it effectively allows lenders to see far more data than ever before on an applicant’s credit history,” she said.

“Many clients are shocked to find that a small indiscretion such as a late fee on a credit card can rule out a loan application, especially if the credit card needs to be refinanced.”

3. Attractive security
Structure projects to ensure the bank’s exposure is minimised.

“If a bank can safely take the value of vacant or unimproved land, savings can be used to bring in a removable home, construct a custom-designed home or undertake an owner builder renovation,” she said.

“A holiday home in a remote area is still possible on a lower LVR, secured against a strong owner-occupied security.”

4. Opportunity knocks
Expect to see increasingly low interest rates for attractive transactions with low risk.

“Banks have not used differentiated pricing as much as they could to attract the sorts of security and risk exposure that they’d like,” she said.

“As the competition for quality homes on the Surf Coast continues, the smart money is moving to sure up finance arrangements prior to offer. Never before has an unconditional offer been more sought after by sellers.”

Lanie has 25 years’ experience in banking and financial services. For more tips and advice, contact Lanie Conquest at Surf Coast Finance on 0418 938 646 or [email protected].