While restrictions couldn’t get tougher in NSW during this current lockdown, some lenders are adopting stricter lending policies, especially around job and income stability.
These policy changes are temporary and in response to the current lockdown situation and focus primarily on unstable incomes during this period.
Some lenders will require the following additional documents to verify your financial situation:
• Mandatory notes detailing if you have or have not been impacted by the current lockdown, and if so, what is the impact. If there has been no impact, an outline of how you haven’t been impacted still needs to be included.
• For PAYG clients, one payslip must be for the most recent pay period as per your pay cycle. For example, if the pay cycle is fortnightly, the most recent payslip can be no more than 14 days old. In addition, payslips may be required right up to settlement.
• For self-employed clients – 30 days business bank statements showing business income credits as well as your latest BAS statement.
• If the bank statements or payslips show any change to your income position, we need to provide details on how you intend to make repayments on an ongoing basis.
If your circumstances have changed before or during the home loan application process, this may impact your borrowing capacity and approval.
The number one concern for lenders is income – can borrowers make their repayments? The lenders will want to ensure no-one slips through the cracks and will be especially tough on the following unstable/income types:
– New jobs within the probation period
– Reduced hours
– Extended leave
– Government support and relief (grants, job seeker)
– Casual & contract income
It’s not usually a good idea to change jobs if you are about to apply or are currently applying for a home loan without disclosing it upfront, as you could be putting yourself in a vulnerable situation. Ideally, we should discuss any plans you may have to change jobs prior to researching lender options so we can make sure we are only applying with lenders who fit this criteria.
Lenders hate surprises, so please let us know if you think any of these changes apply to you so we can discuss a game plan to help mitigate any potential risks.
We will update you on any further home loan policy changes or developments as they come to light.
In the meantime, stay home and stay safe!