Property investors often make the wrong assumptions about what banks and lenders reward and look for when they’re looking to secure finance, according to one mortgage broker.
The lending landscape in 2019 is expected to be one of change between federal elections and the results of the banking royal commission, so attempting to secure a loan this year may be difficult.
“On … average, brokers have access to over 30 lenders, and in this market, there is no such thing as a one-size-fits-all approach anymore,” said Bernard Desmond, mortgage and finance specialist at Loan Market.
“Banks are changing every single day, and the worst mistake a property investor or consumer can do is go to the wrong lender and learn it the hard way where after getting declined or getting rejected for credit.”
Further, Mr Desmond sees people still going directly to their existing bank, thinking that they will be rewarded for their loyalty.
“We see this time and time again, that banks won’t reward good behaviour. Banks reward business,” he said.
“As a consumer, you really need to be aware that what’s right by you is not considered right by somebody else.”
What do lenders look for?
Living life and transacting online makes it easier for lenders to assess their risks when they take on new applicants.
According to mortgage broker Aaron Christie-David, managing director at Atelier Wealth, borrowers have “nowhere to hide” when it comes to their spending habits, and should be aware their discretionary spends are on lenders’ radars.
“Some banks now require transaction statements, which means borrowers can’t hide with their history of spending. The rise in ‘tap and go’ payments plus technology such as bankstatements.com.au can classify spending into categories and give a lender full visibility on applicant’s spending patterns and how much they save – this level of disclosure is unprecedented,” he said.
“Examples include Afterpay, frequent holidays, high spending on credit cards and even spending on gambling, alcohol and dining are being hauled into question if they are ongoing expenses after their loan has settled or if this constitutes discretionary spending,” he said.
You can read more about how your finances will be assessed in 2019 here.