Post the first lock down, the banks have been inundated with applications. Refinances, and purchases alike. And now there’s a back-log as their staff head back home, are trying to home school like the rest of us, using inadequate technology.
Some lenders’ turnaround times to pick up an application is over 30 working days, and approval times are way beyond finance clauses in many cases. Plus, the caution in Victoria is at an all-time-high, so if you think you might want a fast yes, here’s what to have ready to go.
1.. Tick all of the lender’s boxes, first time.
Latest payslips; bank statements showing credits and savings pattern; tax returns; existing liability statements with clear history; latest rental statements; ID, etc. The application doesn’t get past first base unless everything is in order and up to date, and provides clear evidence of the position.
2. Clear flow of money and savings
If you’ve started out with the Barefoot Investor, make sure it’s working for you, or ditch it for an alternative. Moving money here, there and everywhere with no clear line to a savings pattern just creates confusion, and in some cases suspicion.
Ideally, funds to complete the transaction should be in one account, ready to go, and the account should have been increasing over time.
3. Simplify the complex
Particularly important for small business owners is the need to show how the structures work. Who owns what? What entity links to what? Who is entitled to what income? Where is the tax paid? At the end of the day, the taxable income of the applicants is what will count, in most cases. Pictures can be great in these complex situations.
4. Mitigate risks (especially Covid-19)
More importantly than ever, think like a banker and consider what concerns would they have in the current environment. How secure is the income? What about the tenants? How has the business fared? Show them.
5. Pick a lender who “fits” the situation
If you’re working with a broker, one of the most important roles for them right now is selecting a lender that most closely suits the situation. Different banks are simply not experts at the same things, even the basics! Some are great with inconsistent income, like emergency services. Others are better than others at self-employed applicants. Most treat trusts and other structures differently when it comes to income, as well as depreciation and existing debts. Some even have a bent toward (or away from) particular industries.
6. Turn the tables around
Finally, treat it like a game. Gone are the days of providing the banks with as little as possible. They’ve been slapped during the Royal Commission for potentially irresponsible lending, immediately prior to a global pandemic. Their job is to be conservative, and forensic in their investigations, and they have more connected systems at their fingertips than ever.
By providing everything they need clearly laid out, how can they say no? If you need help painting the picture, and getting that yes, get good advice.
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For more tips & advice, contact Lanie Conquest or Nicola Tucker at Surf Coast Finance
With over 25 years’ banking & financial services experience, she helps local families & businesses make smart financing decisions.
M: 0418 938 646
W: surfcoastfinance.com.au