Whether it’s your first home loan or you’re an avid investor, applying for and securing a mortgage can seem overwhelming.
This has never been more true than it is now given that COVID has shifted the market and created new barriers and points of confusion for potential borrowers.
To help you navigate your way through the process, we caught up with David Friend of Tiffen & Co to get his best lending tips for the current financial climate.
“The choices now available in the mortgage market can seem limitless and often overwhelming,” says David.
“Using a broker will save a consumer time, effort and money. As we have access to multiple lenders from the major banks to non-bank lenders, our clients can access all of their products through us.”
“The best deal is not necessarily the cheapest. A good broker will discuss with you your current circumstances and your future plans ensuring you have an appropriate product that is going to work for you.”
“Many products can seem like a great deal, but there could be penalties, fees and break costs, or do not offer the flexibility that you require.”
“More so now than ever before, people’s spending habits come under the spotlight when their applications are submitted,” says David.
“Being aware of this in the months leading up to an application being submitted can assist with the living expenses being applied to an application.”
“This is an area that is due to change over the coming months. The responsibility of customers to declare their actual living expenses will be passed on to them, instead of the brokers and lenders having to look through statements to verify living expenses.”
“The main mistakes people make are now having the required funds to complete the purchase and if the application is mortgage insured, having the time required in their current employment.”
“Another area that has changed in recent years are the amount of Zip and Afterpay facilities people have. These are treated like credit cards and have an impact on people’s borrowing capacity.”
“Have stable employment, be able to verify 5% genuine savings and ideally have a 10% deposit. Purchasers should also try to minimize credit card limits and other liabilities.”
“A credit check is done for all applicants through Equifax when an application is submitted to a lender. It is advisable for potential borrowers to order their credit report online to double-check their rating and what liabilities are listed on their report.”
“Failure to disclose liabilities can have an impact on application.”
“Gone are the days of people being able to put an offer on a property for purchase and then arranging finance once the offer has been accepted. Potential property buyers have to have their pre-approval in place before they start looking at property. This will put them in a strong position to be able to better meet the timelines for exchange and settlement.”
“Yes. If an applicant is on JobKeeper this will impact their borrowing capacity and ability to borrow until they can demonstrate they’re back to normal working conditions.”
“Generally, two full payslips are required to verify the return to normal hours and income.”
“There have been several areas impacted in the lending industry through COVID.”
“All offshore centres have been closed by the lenders who had these facilities in place and the jobs have been brought back to Australia. This has resulted in new staff having to be trained and in turn, massive delays in processing times for applications.”
“In relation to changes for applicants, the main changes that have been imposed through COVID are in relation to self-employed applicants.”
“There are more checks now made to verify self-employed applicants turn over and profit through COVID. There is now a requirement to provide more documentation so lenders can confirm there hasn’t been a downturn of profit or turnover through COVID.”
“Anyone looking to purchase or refinance needs to contact their broker and start on the pre-approval process.”