Qualifying for a Home Loan has just become easier.

House

Qualifying for a home loan may be a little easier these days.  Recent changes to servicing guidelines have allowed the Banks to change the criteria they use to assess home loan affordability. 

Already the Big 4 – CBA, ANZ, NAB and Westpac have adopted these guideline changes, with these changes continuing to roll out to nearly all Australian lenders.  It now provides an opportunity for people who may have been declined on home loans due to borrowing capacity over the past 1 to 2 years to review and reconsider their options of buying a home.

The changes the Banks have made in relation to the assessment of home loans is having a positive impact on the capacity of Australians to now gain higher levels of home loan amounts.

Here is an example of how this can impact a potential home buyer.

Case study is a couple with 2 children with husband salary of $70k per annum and wife stay at home and receiving $15k per annum in Centrelink Family tax benefits. They have a $10k credit card. Their monthly household expenditure is $3000. They had approached a major bank for a $320,000 home loan earlier this year. Unfortunately, they were declined as the bank calculated their maximum borrowing capacity at $292,000. Today, with the changes to the “floor rate” used in calculations, they would now qualify at $342,000.

If the situation was different; Same couple and children with the wife now working with a salary of $40k per annum.  Also having a rental property earning $350 per week rent, with a $280K investment property loan with 25 years term remaining. Under the old guidelines they would have again failed as their borrowing capacity was only $285,000. Today, this is much better at $366,000.

This also indicates that potential borrowers that have an existing rental property loans or are seeking to buy an investment property are going to benefit greatly from these new changes.

Here is a link to the full article this information has come from. https://www.canstar.com.au/home-loans/home-loan-commbank-nab-anz-westpac-approval-process-changes/

If this situation applies to you or anyone you know, please touch base with me.  I look forward to helping anybody who has recently had difficulty obtaining finance and still considering a home or investment home purchase.   

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