Westpac’s new tougher lending process to smoke out lying home loan borrowers
In an effort to put an end to ‘liar loans’, Westpac have revealed they will now be enforcing a tougher lending process to potential homeowners looking for a home loan with the big bank.
Under the new application process, mortgage brokers will now ask would-be buyers a longer set of questions in a number of scenarios to determine if they would be able to meet monthly repayments - potentially smoking out lying borrowers.
“We’ll be working closely with all brokers over the coming months to support them with this new way of working - many had already adopted this approach and have been working this way for some time,” a Westpac spokesperson told The New Daily.
While the goal is to minimise risky lending and delinquent home loans, Westpac may see a fall in customers, as a number of applications could potentially be declined.
And even though first home buyers could now find their palms sweating at their local Westpac branch, an increase in tighter lending isn’t a recent development.
APRA’s announcement earlier this year involving stricter lending saw the first drop in interest-only home loans since 2009, with data also revealing a fall in the number of loans approved with a deposit of less than 10% of the property’s value.
However, the big difference between Westpac and APRA’s lending restrictions is that Westpac’s new lending criteria applies to all borrowers, including owner-occupiers making principal and interest repayments, whereas APRA focused on investors and homeowners paying interest only.
As it seems that first home buyers could see their jump into the property market turn into a squeeze, Aussies will now need to do whatever it takes to boost their chances of getting home loan approved.
How to boost your chance of getting home loan approved
Live within your means - Excellent money-management skills are key when it comes to getting approved. This means that you’ll have to budget for a while and cut back on splurges.
Don't take the new job, just yet - One thing you will have to prove to the banks is your ability to meet your repayments, meaning, they’ll want to see 3-6 months of recent payslips. So hold off on a career change until after you’ve been approved.
Maintain a clean credit file - Having a spot on your credit file is like a sharp sting to your application - it’s inconvenient and can make things worse over time. Keep on top of your debts in the lead up to applying, and make sure you check your credit report for mistakes that may count against you
Save like crazy, then prove it - Many banks now enforce a mandatory genuine savings policy and will ask to see three months worth of savings, so try embrace a more frugal lifestyle.Try setting up regular transfers into your savings account as proof that you’re financially savvy.
Ready to get approved? Check out Mozo’s home loan comparison tool.
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