Gone are the days when hopeful home buyers needed only to rely upon a templated household
living expenses calculator to support their loan application. The lending landscape certainly has
shifted, with the recent Banking Royal Commission putting pressure on banks to verify their
customers’ living expenses with documented activity, direct from their bank accounts.
So, what does that mean for home buyers? Essentially, the revised lending conditions have been
implemented to protect the consumer, and reflect genuine affordability; they don’t want to issue
loans to those that don’t have the capacity to manage the repayments.
Spending and saving track record
Many banks will want to review your spending activities for a 3-4 month period leading up to your
loan application. This may mean avoiding any extra-to-normal spending peaks such as holidays,
new furniture or lifestyle purchases, in order to demonstrate a standard ‘slice in time’ for review.
Automate your budgeting
The new buzz in budgeting is automation. With all household income coming into one account
then divided up via periodical payments into other accounts such as ‘everyday’ and
‘commitments’. Once set up, budget automation enables funds to be disbursed (before they are
spent) to cater for committed expenses like loan repayments, bills and education expenses etc.
Group your commitments
While it can seem daunting to try and estimate your living expenses, sometimes it’s about
knowing where to start. By grouping your spending into identifiable categories, and ensuring
that everything is accounted for, it not only empowers you with knowledge but will also assist you
to reduce discretionary spending by default.
Get the right advice
Just like it’s good practice to get regular health-checks on existing loans, when planning on a new
loan it’s also worthwhile getting a health-check on your spending and saving habits. This gives you
the chance to re-calibrate along the way if necessary and also keep up-to-date with bank’s criteria
Understanding your individual timeline and goals, when it comes to accessing finance, will make
the difference in sourcing a lending solution that works for you. At Nelson Mortgages we work with our clients to get loan-ready, reminding them that the path to home ownership is a journey – for some it’s a marathon not a race.
Over the last 12 years Paul Nelson has been helping local families, couples, investors and retirees to feel in control of their financial future. After over 15 years in the mortgage industry and working with major banks, and with a genuine passion for education, Paul wanted to do things a little differently. And, it’s that genuine desire to help and to create long-lasting relationships that continues to set Nelson Mortgages apart.