The findings of the royal commission has resulted in the microscope being put on the banks and they are under increasing pressure to ensure they verify all applicants details in greater depth but specifically there has been a focus on correctly validating a clients living expenses.
To ensure all information is recorded most banks are now validating an applicants estimate by reviewing up to 3 months worth of bank statements as well as ensuring the applicants fill out a 13 question living expense questionnaire .
The extra diligence that is being taken by the banks has resulted in some banks tightening credit policy and assessment times increasing so the best way to counter this prior to making an offer and remove some of the stress involved with purchasing a house is to have a pre-approval in place to ensure you know exactly where you stand.
A second major shift in the banks assessment has been the introduction of comprehensive or positive credit reporting on each applicant. The assessors will now have access to current accounts held, what accounts have been opened and closed, the date default notices were paid and whether repayments were met.
You will get a positive mark each time you repay a loan on time thus increasing your credit score. Previously if you defaulted this would put a black mark on your file and this is all the bank would see but by having more comprehensive reporting this will assist in giving your file a more comprehensive report.
For example if you have a credit card for 12 months and make 11 payments on time and then are late for one payment instead of the bank just seeing the late payment they will see the 11 positive marks as well giving a truer representation of an applicants behaviours.
Although a lot of the media has been negative it is not all doom and gloom with some banks offering thousands of dollars in incentives and special under the table rates to win over good quality clients. Feel free to get in touch with the award winning brokers at Napoleon Finance to compare if your current arrangement is the best for your situation.