Has anyone applied or is in the process of applying for a home loan recently? There has been a lot of news about banks ramping up the loan assessment process and becoming super difficult to borrow from. Has anyone found that to be the case?
Home Loan Applications
clubhonda on 20/09/2018 - 22:21
Comments
Did you stay with the same bank a few months ago ? Did you use a broker ? Would you consider changing banks next time ?
I refinanced with a new lender (a building society).
Our financial situation was better in 2018 than 2015:- no car loan any longer
- higher salary
- lower interest rate
- borrowed about 5% less
Admittedly, it was for a reasonably large amount (close to $1m).
This was all done through a broker (same broker in 2015/2018).
We're going down that path now.. It's a PITA.
We were just looking at borrowing to do some extensive renovations. We have a perfect credit history, no other debts (not even a credit card), dual income and our property is in a good area. We have been paying around $800 per fortnight more than our minimum repayment for as long as we can remember. We were knocked back from taking our loan to $590K.. We were astounded. We’ve now revised our plans are are hoping to borrow a little less. I agree with rdallen above though- it is an awful, negative experience and very invasive. I can’t understand why they can’t just look at our ten year mortgage history with them and our secure jobs to see we’re just capable of servicing the loan! We’re considering using a broker this time just to avoid having to deal directly with the bank.
Don't let the behemoth banks ruin your plans and aspirations - you're on the right track thinking of using a broker.
With Royal Commission sitting like a cop outside the door - the banks have gone pretty defensive and unnecessarily cautious. I am in similar situation after trying with the same bank that i had been banking for 10yrs and getting a "No" after 3months of providing documentation..i hv now approached a broker. Lets c.
its crazy !
Hi Burtie,
I'm working on a story with a journalist on people being knocked back on loan applications even though they have perfect credit history. Would you be interested in chatting to a journalist?
Thanks!
Because banks should approve all loans on the basis of someone thinking they have a perfect credit history?
Wow…
I find it amazing a lender will loan to an employee of a small business with minimal employment duration history, who is at the mercy of the business' success, yet the employer who has more control of his financial destiny and income is almost banished from the loan pool.
Q to employee - How long have you been employed as manager at "X Pty Ltd" - Answer - over 2 years now - 30 year loan approved
Q to business owner - how long have you been in business ? - Answer - I've regularly provided my own income from my business for over 2 decades now - 5 year (temporary) loan approved.Over the next month, i'll be going through a refinance of existing homeloan with ambition to arrange an equity release & pre-approval for investment property purchase. Using a broker as not tackling it myself.
I'll report back on how it goes.
A week ago, I applied for a loan through a second tier lender and it was approved in 3 days (although second tier lenders are not bound by the APRA rules, so the royal commission probably didn't impact them).
is there a complete tier ranking and definition available ?
I don't have a definitive definition of my own. I consider "first tier" to be the big 4 banks and their associates and those that are regulated by APRA. If I remember correctly, they're called authorised deposit institutions or something along those lines.
Then you've got the second tier lenders that are non-bank lenders. These guys source their funds from somewhere else.
I just found some info:
https://mortgageexpertsonline.com.au/loan_types/non_bank_len…Generally, any institution that takes deposits (and thus covered by the government's deposit guarantee) are bound by more rules. These include smaller banks and building societies. The second tier lenders get their funds from non-deposit sources only.
Care to name the second tier lender? My big bank told me citibank and hsbc are 2nd tier and i was like what?
There's LaTrobe Financial, Pepper Money and Liberty Financial. They're are probably a few more, but they're the ones my broker considered.
My big bank told me citibank and hsbc are 2nd tier
I just realised that some people refer to 1st Tier as the big 4, 2nd tier as the smaller banks like citi and hsbc, then 3rd tier are like the ones I've mentioned above. Although I'm not surprised the big banks want to differentiate themselves from the smaller banks.
Can I very gently point out that no one is entitled to anyone else's money? It doesn't matter how good your credit history is, if someone doesn't want to lend you their money, they're really under no obligation to do so.
Having said that - I also have no idea why anyone deals directly with a bank. Going through a broker is much more convenient in my experience, not to mention you generally end up with higher borrowing power (don't ask how), and you can even get a better rates/rebates/cashbacks because some brokers are willing to dip into their commissions to sweeten the deal.
not to mention you generally end up with higher borrowing power (don't ask how)
I thought this was part of the problem in the past, that brokers have been fudging figures etc to get people more money.
But I do agree, using a broker is generally less painful.
It's a problem for irresponsible borrowers (that I
don't care aboutwon't assume people are) and it's a problem for the system in general (too much unsustainable borrowing). As far as responsible individuals themselves are concerned though - they want to borrow money, brokers help them borrow money.
I refinanced in 2015, then again a few months ago. The difference was huge. In 2015, it took about 5 weeks from applying to settlement, and very few questions were asked. It was a breeze.
This year it took closer to three months. They kept demanding more and more documentation, explanations on what our expenses were, etc. They went through all documentation with a fine-tooth comb. They understood our financial situation perfectly before approval.
It was a seriously invasive and negative experience.
I now have no intention of refinancing again, unless there is a huge financial gain. It simply isn't worth the effort.