mortgage application

How your online info can scare banks away

AdobeStock_102029688 copy.jpg

We might be connected better than ever thanks to the Internet, but this excess of information isn’t all good news when it comes to finance and property.

 

A quick Google of myself and my home address discovered this about me:

  • Where I last went on holiday
  • The companies of which I am a shareholder and director of
  • My last marathon time
  • A lot about my business and who I work with
  • An estimate of what my house would rent for
  • That I write lots of awesome blog posts(!?)
  • A YouTube video of me
  • A bunch of work photos
  • My estimated house value
  • My neighbour’s estimated house value
  • My credit score

 

There is some helpful stuff here, but also some stark finance-related privacy concerns. Here are a few thoughts …

 

Credit scores

In business and when it comes to trying to get a mortgage or secure credit of any kind (from getting a power account, to renting a home or getting a couch on HP) your credit score matters. Your credit score is something to take seriously and protect carefully. 

 

Here’s my advice: Pay now and argue it later. A clean credit score matters more than a $100 phone bill or gym membership dispute. Furthermore, companies are now reporting to credit agencies if you pay your bills on time. So, if you are considering applying for credit, be sure to keep those bill payments rolling through on time.

 

Where I went on holiday

Mental note, change my privacy settings on Facebook.

 

What my house will sell for

In my work, I deal with lots of real estate agents and from them I have heard some of the dangers of relying on estimates of house prices/values. 

 

Although it is kind of fun to know what your (or your neighbour’s house) is worth, it is a pretty broad estimate, based on comparable sales, that a computer algorithm works out. It is pretty clever, but of course it hasn’t viewed the condition of your property or your neighbour’s or the state of comparable sales or the way your place soaks up the sun or grows mould and so on and so on.

 

These “smart predictors” can lead to false expectations by all parties (buyers and sellers of property), so do take these figures with a grain of salt. And I would make the same comments about the newly launched online rental appraisals that are now popping up.

 

If I can find out the above about me, so can you … and all my clients, colleagues, family and friends. An awesome opportunity and a sobering thought.

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

 

Two Big Shifts in Banks’ Lending

We’ve talked recently about how the banks are tightening the screws of their lending. Here are two recent changes that are creating increasing challenges for borrowers:

 

BANKS ARE CHECKING THE SMALL STUFF

More than ever, banks are going through our applications with a fine-tooth comb. They want to make sure that full-expense budgets have been completed and that these align with bank statements. As an example, we have had deals declined because of two or three unarranged overdraft fees on bank statements.

 

On a similar note, banks want confirmation of where your deposit has come from. So having $30,000 show up in one lump sum into a bank account will raise some questions. The origin of these funds needs to be verified. This has always been the case but our observation is that banks are becoming more particular about these smaller points at the moment.

 

IF IT’S NOT PLAIN VANILLA, THEY’RE NOT INTERESTED

There is no real appetite from banks to do deals that are outside the ordinary—they’re passing up Goody Goody Gum Drops in favour of boring old vanilla.

 

Within banks right now, it seems the credit department is winning over the sales department. They are more concerned about protection and bracing themselves for the uncertainty of the future rather than growing their customers numbers.

 

So, if you are a standard customer with a 20 per cent saved deposit on a good PAYE income, certainly there is no problem getting money. However, if your income is variable, if you are new to business or if the house is out of the ordinary, there are more questions and more challenges being raised by the banks.

 

As always, we will keep you posted with the latest changes. It is our job to stay on top of what the banks are doing so that we are able to provide the best possible advise and mortgage solutions for our clients.

 

Don't hesitate to run your scenario past us if that would be helpful

 

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.