The royal commission into the banking industry is all over the news. The commission will bring with it many changes to the industry which we are already starting to see.
The first major change is lenders making changes to their policies in regards to living expenses. As a broker we now have to provide a detailed break-down of the borrowers living expenses.
What does this mean for you?
- We will require more information from you when we start looking at your loan application
- If you are living rent free the lenders will still give you a minimum rental expense
- If your living expenses are above the lenders set thresholds this might impact your borrowing capacity
- If your living expenses are below the lenders set thresholds then we need to explain why
- If you are already spending the majority of your income on living expenses then lenders will question how you are can afford a mortgage
We strongly advice to start being aware of your monthly budgets.
- Can you reduce your household expenditure?
- How do you spending habits look when you review your monthly transactions?
The main point we would like you to get from all of this is that you must be conscious shoppers / spenders – be aware of your income and expenses. If you would like more information please give us a call.