The journey to ✔APPROVED is quickly changing and it is a lot more complicated now than 2 years ago. When it comes to borrowing money it is more than just how much deposit, how much money do you make and what is the interest rate. Now it is expected that applicants provide more detailed information in order to verify goals & objectives, income, complete financial position and actual household monthly expenses.
When applying for a loan, how you have spent your money over the last 6 months will likely be under review. Previously estimating an applicant’s household living expenses and checking it against the HEM (Household Expenditure Method) as a guide may have been accepted, however, regulators now expect credit providers to gain more proof around an applicants income, monthly outgoings and expenses to verify their true capacity to safely borrow money. Most lenders now have at least 12 household expense categories that they require comprehensive proof around the true amount of money being spent.
It is now commonplace for a lender to expect to see:
3 – 6 months banks statements showing all your household bills
explanation around some household spending items
1 – 6 months statements for every credit facility you have (refinancing or not)
comprehensive income verification documents
Discussion in regards to the applicants short and medium term goals & objectives
These changes are not just for new home loan applicants. Regulators are expecting to see credit providers conduct assessments/ reviews when people are wishing to make adjustments to their loan like a change from variable to a fixed interest rate, loan splitting, loan increases or moving from P&I to interest-only payments.
How you spend your money in the 6 months before any loan application or loan adjustment may have an impact on getting the ✔approved decision. As mortgage brokers and lending specialist Greater Finance has the experience to review your spending and can help you make a spending plan in preparation for home ownership or refinancing.
To find out more, book a time to chat with Greater Finance today.