Borrowing Money and Loans During Covid-19 in Australia
Does having pre-approval mean my loan application will be approved?
As lender policies and property values are rapidly changing during COVID-19, a pre-approval is not always a reliable indicator that your loan application will be approved when you find a property. Very few lenders will offer fully validated pre-approvals, and many lenders have currently stopped offering pre-approvals and will assess the loan once a full application is made. It’s important to talk to your finance broker early to discuss whether your loan is likely to be approved and determine the appropriate course of action.
Will accessing my superannuation under COVID-19 provisions affect my loan application?
Many lenders will decline a loan application where the applicant has withdrawn super under COVID-19 provisions, and none will currently accept these funds as available to assist with the purchase. Speak to your finance broker for more information.
What extra information will the bank require?
Lenders are currently asking for additional information to determine whether COVID-19 has had, or is likely to have, any impact on your financial situation. They may ask for additional evidence of your income over a longer period than usual, particularly if you are self-employed. If you are refinancing an existing loan, lenders will also want to see evidence that you have been able to maintain payments on your loan.
What if I work in an affected industry?
In many cases, the answer will depend on how badly your industry has been affected by COVID-19. Unfortunately, some lenders are currently reluctant or unwilling to lend to employees of certain industries during this period, however in many cases we are still able to match clients with an appropriate lender for their circumstances. It’s important to speak with your finance broker early to check what options are available.
How long will it take to find out if my loan has been approved?
COVID-19 has had a significant impact on most lenders due to increased workloads and a change in workforce arrangements. Depending on the lender and the complexity of the loan, approvals can take anywhere from around one week all the way up to two months. Priority is generally given to new purchases with refinances tending to take longer to be approved. Due to increased wait times, make sure to speak to your broker before signing anything to ensure you have sufficient time to arrange property finance.
Will deferring payments on an existing loan affect a new loan application?
Although deferred repayments do not appear on your credit report, most lenders request up to six months of home loan, personal or car loan, and credit card statements. If there is evidence of deferred payments it is unlikely the lender will approve your loan application.
What if I am receiving JobKeeper payments?
If you are receiving JobKeeper payments, lenders will generally ask for additional evidence to get a better understanding of your financial situation and job security. Depending on the lender and your personal circumstances, in addition to normal requirements you may be asked to provide a letter from your employer showing a return to work date, pay slips dated prior to the commencement of your JobKeeper payments showing your pre-COVID income, a breakdown on the hours you are actually working, or additional financials or tax returns for previous years in the case of self-employed applications. Your finance broker will talk you through the requirements for your loan application.
Why should I see a finance broker during Covid-19?
During COVID-19, lender policies are rapidly changing. A no from one lender may be a yes from one who is a better fit for your circumstances. We have a thorough understanding of lender policies and can help match you to an appropriate lender for your situation, saving you time and hassle.
If you would like further information or have any questions, please call Marty and the team at NBS Home Loans on 0434 103 326.