This pandemic has made getting a loan a little more difficult as well as more complicated. Job losses and a slowing economy mean lenders are being more prudent; they are tightening their lending policies and changing the way they’re assessing your income.
However, I’ve been keeping a very close eye on what our lenders are doing so I wanted to give you a heads up on what’s changed.
Whether you can get a loan at the moment – and how much you can borrow – will depend on:
- The industry you work in: If you are working in any of the sectors that have been hit hard by the crisis – hospitality, tourism, events, aviation, entertainment and retail, to name a few – it’s going to be tougher.
- The type of work you do: If you have a casual job or are on a contract, you are unlikely to be able to include this income in your serviceability assessment, regardless of the industry you work in. Income from bonuses, commissions and overtime may also be assessed differently.
- The type of loan: Whether you are applying for a home loan or an investment loan will affect how your income is assessed.
- The lender’s risk appetite: Each lender has a different stance on how much risk they want to take on and this will affect how much they are willing to lend you.
- The lender’s strategy: Different lenders will have different strategies towards their existing borrowers and their new borrowers. For example, refinancing with your existing lender may be easier than trying to get a loan with a new lender.
- Time: Lenders are changing their policies regularly, so your eligibility for a loan could change from one week to the next!
- Your documentation: Generally, you can expect to face higher scrutiny around the security of your job and financial position, and you may need to provide more documents to prove you will be able to meet your loan obligations.
So, if you are considering taking out a loan, please let me help you navigate this increasingly complex and rapidly changing lending market. I can assess your overall financial situation and determine if it’s in your best interests to even take out a loan. If it is, then I’ll help you choose which lender will work best for you.