With COVID-19 restrictions and tightened lender criteria, some people are reporting that it may be more tricky to secure a home loan. But is that true, or is it just our perception? In this episode we look at :

• Whether COVID-19 restrictions have made it harder to secure a home loan
• Whether banks are being stricter when they assess home loan applications
• How long it's taking banks to assess and process loan applications
• What types of home loans and mortgages are harder to get approved
• How to make it easier for the bank to assess and process your home loan application

Follow the Dream Home Movement Facebook Instagram Web Follow Carl and Jo Violeta Facebook Instagram Web Guest bio Carl’s an award-winning Mortgage Broker and the Founder of Violeta Finance. Carl believes that every family should have a fair opportunity to achieve their homeownership and finance dreams. He can help you buy your next home or save money by refinancing. Carl specialises in helping first time investors buy their first investment property and securing finance for small business owners. When he’s not helping people find the right loan for their circumstances, Carl loves hanging out with his wife and two kids, watching his beloved Chicago Bulls play, and heading out to the golf course. Transcript *This transcript is automated, so may not be 100% accurate* 00:00:00 - 00:00:05 In this special bonus episode of the Dream Home Movement, we look at 00:00:05 - 00:00:11 whether or not it's harder to get a home loan now. With COVID-19 restrictions 00:00:11 - 00:00:18 and tightened lending criteria, some people are reporting that it may be more 00:00:18 - 00:00:23 tricky to get a home loan. But is that true, or is it just our perception? 00:00:23 - 00:00:28 To answer that question. I've invited a special guest and experienced Mortgage 00:00:28 - 00:00:33 Broker Carl Violeta, he also happens to be my husband onto the show. 00:00:33 - 00:00:38 Welcome to the Dream Home Movement. This is your weekly dose of home 00:00:38 - 00:00:43 and property inspiration, bringing you clever tips and advice from the very 00:00:43 - 00:00:49 best experts. And real life like Renno stories with your host, Jo Violeta. 00:00:49 - 00:00:54 Thank you for tuning in to this special bonus episode of the Dream Home 00:00:54 - 00:00:58 Movement. Now if we haven't met before. Hello, My name's Jo Violeta, and I 00:00:58 - 00:01:04 co-own a successful award winning mortgage brokerage with my husband carl. 00:01:04 - 00:01:09 It is Violeta Finance, and this episode is brought to you by Violeta 00:01:09 - 00:01:14 Finance. If you need help securing a home loan, refinancing your Mortgage or 00:01:14 - 00:01:21 organising a loan for your investment property. We would love to help 00:01:21 - 00:01:27 you. Now just to let you know who we are still in the midst of the COVID-19 00:01:27 - 00:01:32 restrictions here in Melbourne and that means that we are working from 00:01:32 - 00:01:37 home in very close quarters. So if you hear any background noises on this 00:01:37 - 00:01:43 episode, maybe kids doing crafts or playing or some typing or something like 00:01:43 - 00:01:49 that, it is because we are all working from home and also because of the COVID-19 00:01:49 - 00:01:53 restrictions. I don't have access to the usual recording equipment that I 00:01:53 - 00:01:58 would use for the podcast. I can't go to the radio station. I can't get into the 00:01:58 - 00:02:05 office to access my hi-tech equipment. So Carl and I huddled over a desk and a 00:02:05 - 00:02:11 microphone at home together, trying to record this episode for you. 00:02:11 - 00:02:15 Welcome to the show, Carl. It's lovely to have you back on. I haven't had you 00:02:15 - 00:02:20 on the show for a while. It has been a little while, and thanks for having me. 00:02:20 - 00:02:26 So today we are answering the question. Is it harder to get a home loan right 00:02:26 - 00:02:32 now? So let's first of all, look at it from the perspective of COVID-19. So 00:02:32 - 00:02:37 we're recording this episode on September 30th. We live in Melbourne in 00:02:37 - 00:02:45 Australia, so we are right in the still in the midst of COVID-19 restrictions. 00:02:45 - 00:02:50 Have covert COVID-19 restrictions made it harder for people to secure a home loan? 00:02:50 - 00:02:58 If a client has been affected by COVID, yes, it has been challenging to get 00:02:58 - 00:03:05 loans approved for them. But for other clients that the only effect of COVID 00:03:05 - 00:03:13 has been of a personal nature and not a financial nature then no that hasn't 00:03:13 - 00:03:18 really been any stoppage of the flow of finance for those types of customers. 00:03:18 - 00:03:26 Customers were working in the retail setting in sort of hospitality in the airline 00:03:26 - 00:03:31 industry then. Yet those those types of employment and those types of 00:03:31 - 00:03:36 customers would find it a bit challenging to try and secure finance. What about 00:03:36 - 00:03:42 the way lenders are assessing applications, especially expenses? What I've 00:03:42 - 00:03:48 heard is that lenders are going through applications with a fine-tooth comb now 00:03:48 - 00:03:55 Have you found that to be the case? It depends on the bank that you 00:03:55 - 00:04:02 suggest to the clients. There are banks that will go through bank statements to 00:04:02 - 00:04:11 verify living expenses as well as salary credits. But not all banks do do that, 00:04:11 - 00:04:16 eh? So, yeah, it really just depends on which path you take the customer in 00:04:16 - 00:04:22 relation to bank statements being forensically investigated. And is it just 00:04:22 - 00:04:25 the bank statements that they're going through and scrutinising are they 00:04:25 - 00:04:32 scrutinising other documents, other evidence or information asking for a lot of 00:04:32 - 00:04:38 additional documents, proof, evidence, that sort of thing? For sure, you know 00:04:38 - 00:04:46 , with COVID it has definitely added a layer of requirements for all banks, I 00:04:46 - 00:04:52 would say, particularly when a borrower self employed, they're now wanting 00:04:52 - 00:04:58 to see extra documentations. They just want to make sure that you know the 00:04:58 - 00:05:05 borrower's income is online or inline, I should say, than what their 00:05:05 - 00:05:11 income tax is suggesting it to be and that they haven't really had too 00:05:11 - 00:05:16 much of an impact with with COVID, particularly here in Melbourne, where 00:05:16 - 00:05:20 we've been the hardest hit. Yes. Oh, so to answer your question, yes, there 00:05:20 - 00:05:25 are a lot more documentations that need to be provided, particularly for self 00:05:25 - 00:05:30 employed customers. Okay, so banks are still lending money. If your income 00:05:30 - 00:05:36 hasn't been affected by COVID-19 restrictions, you still should be able to 00:05:36 - 00:05:40 borrow money. It shouldn't be any harder to borrow money, but the process 00:05:40 - 00:05:47 might be more involved, I suppose. It's just a little bit different to what many 00:05:47 - 00:05:52 customers might be accustomed to when they applied for finance pre-COVID. 00:05:52 - 00:05:58 And yeah, just if you know, if you're in a position to borrow money and 00:05:58 - 00:06:03 you know that you can borrow money, then you really got nothing to fear before 00:06:03 - 00:06:08 you place an application and if you're going through a broker then a broker's 00:06:08 - 00:06:14 going to tell you whether they can get the loan approved or not anyway. So all 00:06:14 - 00:06:20 I would say to customers is that you know, don't don't sort of fear the process, 00:06:20 - 00:06:25 provided that you know, your employment has been stable, your business 00:06:25 - 00:06:31 hasn't been affected and that, you know, you've got sort of strong, strong 00:06:31 - 00:06:39 finances going into the application. Okay, good. What about timelines? So is it 00:06:39 - 00:06:43 taking longer to get home loans approved? Should people allow a little bit 00:06:43 - 00:06:49 more of a time buffer when they're looking to apply for a home loan? I have 00:06:49 - 00:06:54 heard that some banks assessment and processing times are a bit longer than 00:06:54 - 00:06:59 usual. What's been your experience with that? Yeah, many customers are 00:06:59 - 00:07:06 looking to refinance at the moment and, many banks are offering cashback 00:07:06 - 00:07:14 offers. So banks that are offering cashbacks their lead times in processing 00:07:14 - 00:07:21 loans is not as desirable as other banks that are not offering cashback offers at 00:07:21 - 00:07:26 the moment. So again you know a good broker is going to be able to be 00:07:26 - 00:07:32 across that with lead times. If you know if your finances pressing, then 00:07:32 - 00:07:37 definitely avoid certain banks because you're not going to get the loan processed 00:07:37 - 00:07:43 in a timely manner. But if you're after, you know, the cash as part of 00:07:43 - 00:07:47 the refinance, let's say then, if you're happy to wait, then you know the 00:07:47 - 00:07:52 processing time is what it is. If you're purchasing a property, then definitely 00:07:52 - 00:07:57 steer clear of those lenders that are offering cashbacks at the moment, 00:07:57 - 00:08:01 particularly when your finances subject to... When your purchase, I should 00:08:01 - 00:08:07 say, subject to finance clause, there's nothing worse where a customer has 00:08:07 - 00:08:12 been placed with the lender, not knowing that the lead times are not going to 00:08:12 - 00:08:17 be able to meet their obligations on the contract when they're buying a house. 00:08:17 - 00:08:23 Okay, so a few things. I wanna clarify their cap by cashback that banks 00:08:23 - 00:08:27 offering, like a cashback offer. If you get a home loan with them or you 00:08:27 - 00:08:33 refinance with them, they'll say, we'll give you, like, $2000 or something 00:08:33 - 00:08:43 like that. So a cashback promotion relates to customers who are new to the 00:08:43 - 00:08:53 bank and that are refinancing. Okay. The cashback amount does vary it 00:08:53 - 00:08:58 varies depending on their loan size, and it also varies on the type of 00:08:58 - 00:09:06 bank that you're using. Okay, All right. And also again, apologies 00:09:06 - 00:09:11 for the background noises. We are working from home, and we've got little. 00:09:11 - 00:09:16 Marcus is trying extremely hard to be quiet. He's doing a wonderful job, isn't 00:09:16 - 00:09:24 it? He's a good boy. Just another thing that I wanted to clarify. So when 00:09:24 - 00:09:28 you're talking about putting in an offer when you put in an offer for a 00:09:28 - 00:09:33 property, if you haven't got a pre-approval on your finance yet, you can put in a 00:09:33 - 00:09:38 finance, clause, can't you? Yes, you can. And so you might say it's two 00:09:38 - 00:09:42 weeks or three weeks. We usually recommend three weeks, but If you have 00:09:42 - 00:09:46 been placed in the lender who's got really long processing times, that could 00:09:46 - 00:09:51 jeopardise your offer. So that's yet correct. Yes, you need to be aware of that. 00:09:51 - 00:09:57 What are there certain types of mortgages and home loans that are harder to 00:09:57 - 00:10:01 get approved? And not just speaking about COVID times, but just in general. 00:10:01 - 00:10:04 Are there certain types of mortgages and home loans that had just more 00:10:04 - 00:10:09 involved? You know, more workers involved or more paperwork is involved 00:10:09 - 00:10:13 there, there it more complex or tricky. A home loan application becomes 00:10:13 - 00:10:21 harder when you're asking for for their lending policy to be flexible 00:10:21 - 00:10:26 we call that in the industry when you're asking for an exception, that can 00:10:26 - 00:10:33 complicate lending assessment. And there could be a good chance that the 00:10:33 - 00:10:38 assessor, whoever's picked up the file, may not grant you those 00:10:38 - 00:10:44 exceptions. Complicated lending can make the process a little bit more 00:10:44 - 00:10:50 complex when, um, a borrower's a trust for an example. There's a lot more 00:10:50 - 00:10:55 paperwork that's involved with that kind of loans. There's a lot of 00:10:55 - 00:11:00 documentations that needs to be collected from the client to give to the bank. 00:11:00 - 00:11:09 Particularly it can complicate the assessment when the details of the 00:11:09 - 00:11:13 borrowing entity, in this case, being a trust like this example that I'm 00:11:13 - 00:11:17 using, you know, it's a lot of having to go back to the accountant getting that 00:11:17 - 00:11:21 issue fixed up. Then coming back to the client to get the documents signed 00:11:21 - 00:11:27 and giving it to the lender. So you know, it's just added layers. To simplify and 00:11:27 - 00:11:32 summarise loans can get difficult when you're asking for an exception from a 00:11:32 - 00:11:38 lender. What is an exception from a lender? So, for example, let's say that a 00:11:38 - 00:11:42 self employed customer is wanting to borrow money, and they've only been 00:11:42 - 00:11:48 self-employed for 12 months. But the lending criteria for the bank is that 00:11:48 - 00:11:52 you know the business needs to be established for two years. You know, that's 00:11:52 - 00:11:58 that's an exception, you know because it's outside policy. Another example 00:11:58 - 00:12:05 would bay if our customer's needing to use like overtime. And the 00:12:05 - 00:12:11 know, broker's place, the client with the lender that has a stringent policy 00:12:11 - 00:12:14 around. They're not accepting overtime at the moment because of COVID-19 00:12:14 - 00:12:19 for an example. You know that's asking for trouble. You know, you don't 00:12:19 - 00:12:23 want to muck around with those types of requests, best to just find 00:12:23 - 00:12:27 a lender. That's going to be able to work with the incomes that's being 00:12:27 - 00:12:33 presented rather than trying to jam jamming the deal with the lender 00:12:33 - 00:12:37 that it might be offering the best price. Or, you know, Quiet wants to deal 00:12:37 - 00:12:42 with would deal with that particular lender. I like that. Avoid trying to jam the 00:12:42 - 00:12:48 deal we make that it will have been turned into a tweet. Don't jam the deal. 00:12:48 - 00:12:52 Last questions. I know you've got to get back to work, and we've probably 00:12:52 - 00:12:57 only got another good two minutes out of Marcus being about to sit quietly 00:12:57 - 00:13:03 and watch his record a podcast. How can we make it easier for banks to assess 00:13:03 - 00:13:08 and process our loans? What can we do to make the assessor's jobs easier? 00:13:08 - 00:13:14 Provide the requested documentations as requested by the lender, particularly 00:13:14 - 00:13:21 with home loan refinancing. I find that customers can sometimes not 00:13:21 - 00:13:26 provide the correct documentation where they're taking a screenshot of their 00:13:26 - 00:13:29 home loan statement, but it doesn't have their names on it. You know, stuff 00:13:29 - 00:13:35 like that on. Many customers don't have access to computers or do everything 00:13:35 - 00:13:39 by phone and stuff like that. So well, especially now we've COVID-19 I mean, 00:13:39 - 00:13:43 how are we supposed to get out and get access 00:13:43 - 00:13:50 to a computer and a printer and a scanner and that sort of stuff. So provide 00:13:50 - 00:13:56 the right documentation to the broker. The broker should be very well versed 00:13:56 - 00:14:03 in what's required from from the lender. Make sure that whatever the 00:14:03 - 00:14:07 brokers asking, you you kind of give the right information back that way. 00:14:07 - 00:14:10 You know, you're not having to go back and forth back and forth all the time. 00:14:10 - 00:14:20 Sometimes it's unavoidable. But that would be one of my tips for trying to get a 00:14:20 - 00:14:25 loan application sort of done right the first time. That's a great tip. And I 00:14:25 - 00:14:31 would add to that, Do make sure that you use and you work with an 00:14:31 - 00:14:36 experienced mortgage broker because they know the lender policy inside and 00:14:36 - 00:14:41 out. And they will know how to package and present your home loan 00:14:41 - 00:14:47 application in the best possible way for that lender. And finally, don't jam the 00:14:47 - 00:14:51 deal. Thanks so much for coming onto the show that was really 00:14:51 - 00:14:58 informative. Thank you. Thanks for having me. And if you like this and if 00:14:58 - 00:15:05 you like this, give my mummy a five star review. I hope you do. Thanks 00:15:05 - 00:15:09 for joining us on the Dream Home movement. Be sure to come over and say hi 00:15:09 - 00:15:14 on Facebook and Instagram. I hope that your dream home projects are going 00:15:14 - 00:15:17 well, and I look forward to chatting with you again next week.