MELBOURNE MORTGAGE FINANCE LENDING UPDATE – 14.06.19

LIVING EXPENSES ARE NOW A KEY ISSUE

• in the past, lenders generally used minimum poverty line living expense allowances when assessing loans
• most lenders have recently increased the allowance for living expenses when calculating borrowing power
• increased allowance for living expenses can significantly reduce customer borrowing power
• most lenders now require applicants to complete a detailed Living Expenses worksheet as part of an application
• some lenders require the last three months bank statements and will assess living expenses from the statements
• applicants should eliminate any unnecessary living expenses during the three months prior to applying for a loan
• minimising unnecessary living expenses and increasing savings are both important when applying for finance
• loan applications must be very carefully prepared to satisfy stricter lender assessment standards

COMPREHENSIVE CREDIT REPORTING NOW IN EFFECT

• all lenders obtain a Credit Report when assessing home loan applications
• Credit Reports now provide far more detailed information about loan repayment history than before
• lenders can look at repayment history over a two year period on existing loan accounts held by borrowers
• borrowers should make repayments on time and avoid erratic repayment histories on their Credit Reports
• obtaining a copy of your personal Credit Report is very important prior to applying for finance

INVESTMENT LOANS AT OWNER-OCCUPIER INTEREST RATES

• some lenders will approve finance for investment purposes at owner-occupier rates
• borrowers must offer their primary residence as security for the loan, not the investment property
• loan purpose might include purchase of investment property or purchase of shares
• example : $400,000 home loan and $200,000 investment loan for shares, both financed at owner-occupier rate

REVERSE MORTGAGE LOANS FOR SENIORS OVER 60

• specialist lenders are available to provide finance to seniors who have retired
• residence is offered as security for most loans, but holiday home or investment property can also be offered
• loan amount calculation depends on value of property and age of younger borrower
• common purposes : home improvements, clearance of other debts, extra monthly income, car, travel
• independent legal advice is compulsory and loan contracts must be signed in presence of customer’s solicitor

Barry LeBrocq
Melbourne Mortgage Finance
Mob 0437417042
Web www.melbournemortgagefinance.com.au

NOTE: Loans offered are available at time of Update release, but lenders can change or withdraw product offers without notice