LENDING GONE MAD?

Just how hard is it to get a home loan? These real-life examples of applicants who have gone through the mortgage broker Mortgage Choice show how closely lenders are looking at your spending behaviour before they hand over any money.

LOAN TOP-UP

A couple had a mortgage for almost 10 years with the same lender. They had been saving for a few months to pay for a family holiday they had planned, were on time with their loan repayments and both had full-time, stable jobs with good tenure. The couple paid for their holiday with the savings they had set aside and shortly

afterwards approached their broker for a top-up on their home loan for a small renovation. The lender, which had requested to see four months of the living expenses, questioned the cost of the holiday, even though the couple were able to pay for their trip with their savings.

The lender felt that the customers would be living beyond their means even though they were able to prove that they were disciplined savers and were servicing their loan diligently. The couple then decided to refinance their loan with a new lender, which was able to provide them with the top-up they needed without having to change the loan term – and at a more competitive interest rate.

SWIMMING LESSONS

A couple applied for a home loan and provided a detailed breakdown of their living expenses. The lender came back, seeking justification for a $26 fortnightly expense for their child’s swimming lessons. The lender wanted to know whether the expense had an end date. The lender’s rationale for this was that $26 a fortnight over a 30-year loan term would amount to more than $20,000.

DENTAL WORK

A couple with a young son were paying for his braces in monthly instalments over a 12-month term. When the lender went through the application, it asked to see a copy of the contract the couple had signed with the orthodontist.

ENTERTAINMENT

A customer had a $1000 Ticketek expense on her credit card. She had purchased a number of tickets to a concert for herself and a group of friends, who were going to reimburse her in cash. The lender questioned the application as it was concerned that this expense was a regular occurrence.

A similar case was cited by another broker, which said that its customer had a large expense on his credit card as a result of a night out where he paid for his table’s meals, and his friends paid him back in cash on the same night.