How small lifestyle changes can get you the loan you want approved.
You may have heard recently that lenders are now scrutinising the spending habits of borrows down to what they eat… So what’s changed you may ask? Well, after the recent banking royal commission and pressure from the Australian Prudential Regulation Authority( APRA), lenders have become more cautious around assessing lending applications and determining what people can borrow. What this means is, we need to understand what you use on a daily basis because that’s going to affect how much you can borrow. So, as uncomfortable as it is, we need to go through every single line in your bank statements so that we have a better understanding of your spending habits. This doesn’t mean that you won’t be able to get a loan, however, it does mean that there may need to be some tweaks to your spending to get your loan approved.
Here are some tips on how to prepare yourself to get the lender to approve your loan.
TIP 1: Go through your personal budget or go back on your bank statements and see where you are spending your money. Check where you can reduce your actual expenses. Take a look at the expenses that you deem mandatory and you can’t take out, such as your council rates or rent, groceries, medical expenses, insurances. Those are the ones that you probably can’t do much about. And then look at all your other expenses. Basically your discretionary expenses such as gifts, holidays, going out to eat, and any type of entertainment. Try to reduce these outgoings to help build a better picture for the lender so that they’re comfortable with lending you the money that you’re asking for.
TIP 2: Your broker can help you run your bank statements through software that can sort your living expenses, this will be able to give you and your broker an indication of what your spending habits are like and your broker will be able to tell you if you are likely to get the loan you are after. This can all be done before they send an application to the bank, so as not to affect your credit file score. They can also give you an indication of how much money you will be able to borrow based on your current spending or how much you need to decrease your spending by in order to afford the loan that you want.
TIP 3: Change you spending habits over a 3-6 month period. Small lifestyle changes over several months showing good spending habits will give you a better chance at getting the loan you want.
TIP 4: Find out from your broker how much repayments are on the loan amount are looking to borrow based on the lenders assessment rate ( which is always higher than the rate you will be paying). If you can start showing them that you can put this money aside even before they have given you this loan, will prove to them you know how to save and you know how to put away the money that’s required to pay off your loan.
The idea is to show good spending habits, pattern and therefore build a strong character , which can be the difference in getting your loan approved or declined.
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