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What you MUST know to be Loan Fit

For assistance with your loan process, contact our Lending Advisory team at The Practice by emailing at finance@thepractice.com.au or call (03) 8888 4000.

 

 

 

 

 

Have you received a pre-approved for a loan only to be knocked back when you really need that loan?

Things are getting really tough out there when trying to acquire a loan. Even when you are pre-approved, you still need to make sure you fit the criteria because it is likely banks will reassess your paperwork.

Have you felt nervous recently by all the negative stories in the media telling us how difficult the big four are being when it comes to loan approvals?

You’re not alone. Craig Ridley, Director of Lending Advisory, and his team of loan specialists at The Practice, have been busy lately helping clients to become ‘loan fit’ and providing the peace of mind by sourcing loans through alternative lenders. The team has many years’ experience in the world of finance and can provide different solutions outside the big four banks.

Mortgage lenders are forcing borrowers to divulge where every cent is spent. Following the recent banking royal commission, banks and lenders are now intensely scrutinising the living expenses of clients in an attempt to address the concern that many people are living beyond their means.

To further cause you frustration, mortgage lenders are forcing borrowers to divulge where every cent is spent. Following the recent banking royal commission, banks and lenders are now intensely scrutinising the living expenses of clients in an attempt to address the concern that many people are living beyond their means.

For people who are contemplating buying a property in the near future, but do not yet have a pre-approval, we suggest to commence the process at least three months in advance by doing things such as checking all your accounts, cancelling any direct debits that are not necessary, investigating where you can trim your expenses and don’t buy any luxury items.

The goal posts for lending have changed significantly.

Self-employed people and business owners have been hit particularly hard because often they record business expenses on their personal accounts.

“Banks are now checking expenses to the cent which means clients need to completely understand exactly where they spend their hard-earned dollars.

We help our clients by advising them how to successfully navigate through the meticulous process of obtaining a pre-approval, and ensuring when the time to execute the loan (for a new home, an investment or even for a new retail premise or business equipment), the journey is a relatively seamless one.

Recently one of our clients was questioned because the bank discovered a one-off expense of $600 –  client declared it was for a special relationship anniversary, a thoughtful purchase at the time, but unfortunately resulted to an embarrassing conversation,” said Ridley.

Another client had to explain to the bank why the cost of a hearing test for a hearing aid appeared on her monthly statement.

Adding to frustration, clients who were eligible to qualify for a loan of $1.5m now qualify for $1.1M  because the borrowing capacity has changed – it only takes one small item on your statement to affect your borrowing capacity.

Be Prepared – Be Bank Ready

Here are a few top tips from the Lending Advisory team at The Practice

  • Do not take on any extra debts during or prior to the pre-approval process
  • Cash vs Swipe: use cash wherever possible, for example, at a café or restaurants, or on coffees, lunches and parking – banks have detailed lists of exactly where all money is spent
  • Do everything in your power not to incur late fees on bill payments
  • Try to minimise one-off larger payments

You can never be too prepared or enquire about a loan too soon. The Lending Advisory team at The Practice helps to navigate the complexity of acquiring a loan to bring you peace mind.