With lenders tightening their lending policies and far greater expectations now being placed on borrowers, now is the time to get your financial house in order.
In the face of the current economic climate it is essential for home buyers and property investors to get a clear understanding of the expectations now being placed upon them.
The policies of all lenders have changed considerably in recent months as they look to minimise the risk to their business with an increasing focus on borrowers that represent minimal risk.
The tightening in liquidity across global financial markets means there are less funds available for lenders to access in order to on-lend to home loan borrowers.
Accordingly, the market has responded by tightening lending criteria.
Banks are being more selective about the level of risk to which they'll expose themselves. They're looking for 'good risks' - people with genuine savings who can demonstrate discipline with budgets and debt repayment.
Even seemingly minor things like having a transaction account with certain lenders may add weight to your loan application with that lender.
In the current environment your mortgage adviser needs to be up-to-speed with lenders' ever-changing policies - not only where to find the best deals but which lender will accommodate your unique personal circumstances.
Never before has it been so important to obtain advice.
As a result of the changing financial environment, when applying for a loan borrowers should expect:
- Closer scrutiny of their credit history - even the smallest default can jeopardize an application as banks chose to deal only with reliable borrowers
- Closer scrutiny of their ability to service the loan - length of tenure with your employer and consistent business earnings if self-employed are now more important than ever
- Better deals for existing customers - there may be greater flexibility for customers who already do business with a lender, even if you only have something as simple as a credit card or transaction account
These changes certainly don't mean that securing the right loan for your needs is an insurmountable task, but it is certainly a lot more challenging and time-consuming to wade through the policies, loan types, rates and lenders on offer.
At these times, the advice and guidance of an experienced mortgage adviser can be invaluable.