If you have applied for finance recently, or even listened to the 6 o’clock news, you may have seen or heard that lending is getting tougher.
Whilst this is true, it isn’t necessarily as bad as it seems or sounds. The banks are still willing and able to lend, although they do need to ensure that they cover off any potential risks that an applicants income could be affected by COVID-19, and these extra questions and requirements are more than reasonable.
Whilst this can affect some industries more than others, and/or some employment types, the questions are still asked to all applicants. For example, If you are in hospitality, then chances are that your income is likely to be impacted due to restaurants and pubs etc.. shutting down, so the chance that a payslip showing you are still employed and earning income being requested all the way up to your loan settling is highly likely.
If you are self-employed, usually the last 2 years of tax returns will be required to show trading history of your business. As the 2019 tax returns are almost 10 months old, your latest 3 BAS or business trading account statements will be requested to show recent trade. The same goes for employees earning bonuses or commissions – unless these are earned recently, there is a chance that the bank will take a lower percentage of this income, or none of it at all, depending on the industry.
On the other hand, if you are in an essential service which is likely to increase your earnings such as nurses, police, fire etc.. then some banks will actually take 100% of your overtime and allowances (most other industries are only 80%, even under normal circumstances).
As I said, the banks are still very much happy to lend, although it’s extremely important to communicate any concerns you have about your income if you believe you will be affected, regardless of which stage your loan application is at. If there is a genuine concern, we can discuss any potential mitigates which might still help your loan to get approved, as well as safeguarding your ability to make repayments.
As always if you have any questions regarding this or any other matter, feel free to get in touch: 1800 3 PEASY