Every day as broker I’m asked by clients and agents:
“Will the banks still lend money?”
“What if I’m on JobKeeper/JobSeeker?”
“What’s changed – will the banks still accept overtime / bonuses / commissions?”
And in truth, there’s no simple answer. It’s different for every lender.
Some banks will take JobKeeper income, but you’ve got to go to the right bank, with the right application positioned in the right way.
Are the banks looking at applications with more scrutiny right now?
They’re pulling back on what they’ll lend– we even had one big 4 bank pull back on what they’ll lend to doctors right now! And you know things are interesting (translation: not good) when banks are limiting what they’ll lend to doctors in the middle of a health crisis.
Some banks are restricting lending to those who are self-employed or imposing significantly more hurdles.
Some industries are almost completely black listed by some lenders (and not just those in overtly impacted industries like tourism, travel and hospitality – there was a lender a few weeks ago who put out a direct communication that they wouldn’t lend to real estate agents!)
But on a positive note, deals are still getting done every single day.
Some for clients on Jobkeeper, many of whom are self-employed and even one recently which was a favourite of mine where a client was stood down one week and re-employed the next week (all disclosed to the lender) and their loan approval still came through.
Choice of lender has never been more important, nor has the fact the broker your client is working with needs to have an up-to-date understanding of what lenders will do what for whom.
What’s key right now for agents is to be communicating with your vendors about which offers to accept and also how long finance time frames are going to take.
- Working with clients who have an assessed pre-approval.
Some banks do not assess pre-approvals which means that the client has a really wishy washy pre-approval decided by a computer. When they go to purchase a real human being will look at the application in detail and then potentially have extra questions.
Where possible a client who has an assessed pre-approval has already jumped through the bank’s hurdles, answered their questions (which they usually have) and all that should really be needed is a suitable valuation.
- Understanding that Covid-19 has impacted time frames for many lenders.
Some lenders have offshore teams who have ground to a halt with lockdowns. Most lenders have seen a 10-times the normal volume of calls due to people asking for hardship arrangements. And some lenders are chasing new business by offering large refinance rebates which typically slows down their processing (that’s a good quick guide there, if you see a lender offering a large cash back, expect finance at that lender to be slower).
- The first checkpoint is who will give the client a loan
While a great broker knows which lenders can do things quickly, it’s important to understand that the first checkpoint in where a broker places a client isn’t speed of approval, nor is it the rate offered. The first point is always who will give this client a loan.
Some clients have lots of options, others may have a couple, some have only one and if that lender is a slow lender, then that’s the time frame that they’ll have to work within.
In my previous article‘Why to make a broker your bestie’ – I suggested every agent should have a broker on speed dial.
A great broker will tell you if ABC lender is running fast or slow even if the deal isn’t theirs.
They’ll be able to quickly tell you which lenders might do a minimum deposit construction purchase with one applicant on JobKeeper for a client who’s freaking out that they might lose their deposit.
In short, find a broker you trust, build that rapport with them and you’ve got your own cheat sheet to help you communicate with your sellers that much more efficiently during finance time frames.