Having difficulty getting a loan for your home or investment property? You’re in good company, according to Australia’s most published property author Michael Yardney, who says many others are in the same boat as the banks more carefully scrutinise expenses.
His recent chat with building companies revealed that even your dinner choice could have an impact on your future lending potential, which was highlighted by Gemmill Homes managing director Craig Gemmill.
Personal spending habits on things such as clothes, holidays and take away food are becoming a factor when a bank considers a loan application.
“Increased scrutiny into the banking industry and tighter controls on lending obtaining finance is becoming an issue for prospective home owners,” Mr Gemmill said.
“The banks are still lending money, but it’s much tighter, it’s across the board, it’s first, second and third home buyers, these people can’t get the funds.
“In the past banks would work out a multiple of your income, less your big stuff like car debts and exposure to credit cards.
“Now, they’re looking at your bank statements to see how often you have takeaway food.
“APRA want increased security on the amount the banks are lending to home owners, so the balance has shifted.
“The banks haven’t changed their guidelines, but they are just applying them far more stringently now.”
Despite this, Mr Gemmill said Australians could ensure they do not run into credit problems, by following simple rules.
Being prepared before applying for a loan and making easy changes to their lifestyle in the months preceding a credit application can make all the difference.
“The most practical advice we can give, is make sure you are organised before you apply.
“Understand that everything you do is going to come under more scrutiny,” Mr Gemmill explained.
“It’s not just a simple process anymore, technology has been a real game changer.
“People are using less cash, so everything can be tracked when you use your cards.
“Make an informed decision before you buy, knowing that someone is watching you.”
He said most people heard about problems resulting from a credit check after applying for a home loan.
“You can’t do much about it then, but you can be better organised and make small changes before you apply.
“If you’re a day late paying your credit card, if you overdraw your account… that is all reported and that affects your credit score.
“Simple changes can make a huge difference, if owning a home is important to you, make it the priority.”