Green Square Blog

Banks have stepped up the scrutiny on potential borrowers. Once, you’d apply for a loan and you’d estimate your yearly living expenses and that was good enough. Now, some banks want lengthy documents plus three months of credit card statements and spending records.

Mortgage brokers are warning clients against using credit cards for discretionary spending for three months before they apply for a loan. Sure, use them for bill payments and essentials, but lay off the retail therapy.

Finance specialist Yuri Belov, from Our Broker, sees the positive side of lending restrictions on first home buyers.

“Banks are no longer happy to take borrowers at their word on living expenses,” Yuri said.

“Previously, estimated living costs were acceptable, which often meant people ended up borrowing more than they could afford. Now banks verify your living expenses from your bank statements before giving you a loan. This is good because brand new borrowers are now properly protected against borrowing too much.”

For investors, I’ve always believed that savvy people make money in all markets. They might refinance in a market like this and get their equity out and sit on the sidelines or do something else with it.

Yuri says it’s important investors don’t drag the chain when it comes to valuations, especially in a weakening market, where delays could cost you money.

“If you want to keep your powder dry and have options available to you, it is advisable to get property valuations done ASAP,” he said.

“Then you can contemplate your next move (buy, sell, release equity, hold) using real, rather than hypothetical, figures.”

“Valuations are valid for at least 90 days, can be ordered by your broker and done at the lender's expense,” Yuri said. “Delaying ordering a valuation in a market downturn, can be a recipe for disappointment.” 

Yuri can check if there is a better alternative available for you. For those refinancing by the end of May he is offering 2 nights free accommodation in the Hunter Valley.  Call Yuri on 0416 17 37 27 or email at [email protected] 

 

Published by Trevor Back

Principal, Raine & Horne Green Square

Phone: 0428 006 900

[email protected]

 

 

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