With COVID-19 restrictions and tightened lender criteria, some people are reporting that it may be more tricky to secure a home loan. But is that true, or is it just our perception?In this episode we look at :* Whether COVID-19 restrictions have made it harder to secure a home loan * Whether banks are being stricter when they assess home loan applications * How long it's taking banks to assess and process loan applications * What types of home loans and mortgages are harder to get approved * How to make it easier for the bank to assess and process your home loan application

Follow the Dream Home MovementFacebookInstagramWebFollow Carl and Jo VioletaFacebookInstagramWebGuest bioCarl’s an award-winning Mortgage Broker and the Founder of Violeta Finance.Carl believes that every family should have a fair opportunity to achieve their homeownership and finance dreams. He can help you buy your next home or save money by refinancing. Carl specialises in helping first time investors buy their first investment property and securing finance for small business owners.When he’s not helping people find the right loan for their circumstances, Carl loves hanging out with his wife and two kids, watching his beloved Chicago Bulls play, and heading out to the golf course.TranscriptThis transcript is automated, so may not be 100% accurate00:00:00 - 00:00:05In this special bonus episode of the Dream Home Movement, we look at00:00:05 - 00:00:11whether or not it's harder to get a home loan now. With COVID-19 restrictions00:00:11 - 00:00:18and tightened lending criteria, some people are reporting that it may be more00:00:18 - 00:00:23tricky to get a home loan. But is that true, or is it just our perception?00:00:23 - 00:00:28To answer that question. I've invited a special guest and experienced Mortgage00:00:28 - 00:00:33Broker Carl Violeta, he also happens to be my husband onto the show.00:00:33 - 00:00:38Welcome to the Dream Home Movement. This is your weekly dose of home00:00:38 - 00:00:43and property inspiration, bringing you clever tips and advice from the very00:00:43 - 00:00:49best experts. And real life like Renno stories with your host, Jo Violeta.00:00:49 - 00:00:54Thank you for tuning in to this special bonus episode of the Dream Home00:00:54 - 00:00:58Movement. Now if we haven't met before. Hello, My name's Jo Violeta, and I00:00:58 - 00:01:04co-own a successful award winning mortgage brokerage with my husband carl.00:01:04 - 00:01:09It is Violeta Finance, and this episode is brought to you by Violeta00:01:09 - 00:01:14Finance. If you need help securing a home loan, refinancing your Mortgage or00:01:14 - 00:01:21organising a loan for your investment property. We would love to help00:01:21 - 00:01:27you. Now just to let you know who we are still in the midst of the COVID-1900:01:27 - 00:01:32restrictions here in Melbourne and that means that we are working from00:01:32 - 00:01:37home in very close quarters. So if you hear any background noises on this00:01:37 - 00:01:43episode, maybe kids doing crafts or playing or some typing or something like00:01:43 - 00:01:49that, it is because we are all working from home and also because of the COVID-1900:01:49 - 00:01:53restrictions. I don't have access to the usual recording equipment that I00:01:53 - 00:01:58would use for the podcast. I can't go to the radio station. I can't get into the00:01:58 - 00:02:05office to access my hi-tech equipment. So Carl and I huddled over a desk and a00:02:05 - 00:02:11microphone at home together, trying to record this episode for you.00:02:11 - 00:02:15Welcome to the show, Carl. It's lovely to have you back on. I haven't had you00:02:15 - 00:02:20on the show for a while. It has been a little while, and thanks for having me.00:02:20 - 00:02:26So today we are answering the question. Is it harder to get a home loan right00:02:26 - 00:02:32now? So let's first of all, look at it from the perspective of COVID-19. So00:02:32 - 00:02:37we're recording this episode on September 30th. We live in Melbourne in00:02:37 - 00:02:45Australia, so we are right in the still in the midst of COVID-19 restrictions.00:02:45 - 00:02:50Have covert COVID-19 restrictions made it harder for people to secure a home loan?00:02:50 - 00:02:58If a client has been affected by COVID, yes, it has been challenging to get00:02:58 - 00:03:05loans approved for them. But for other clients that the only effect of COVID00:03:05 - 00:03:13has been of a personal nature and not a financial nature then no that hasn't00:03:13 - 00:03:18really been any stoppage of the flow of finance for those types of customers.00:03:18 - 00:03:26Customers were working in the retail setting in sort of hospitality in the airline00:03:26 - 00:03:31industry then. Yet those those types of employment and those types of00:03:31 - 00:03:36customers would find it a bit challenging to try and secure finance. What about00:03:36 - 00:03:42the way lenders are assessing applications, especially expenses? What I've00:03:42 - 00:03:48heard is that lenders are going through applications with a fine-tooth comb now00:03:48 - 00:03:55Have you found that to be the case? It depends on the bank that you00:03:55 - 00:04:02suggest to the clients. There are banks that will go through bank statements to00:04:02 - 00:04:11verify living expenses as well as salary credits. But not all banks do do that,00:04:11 - 00:04:16eh? So, yeah, it really just depends on which path you take the customer in00:04:16 - 00:04:22relation to bank statements being forensically investigated. And is it just00:04:22 - 00:04:25the bank statements that they're going through and scrutinising are they00:04:25 - 00:04:32scrutinising other documents, other evidence or information asking for a lot of00:04:32 - 00:04:38additional documents, proof, evidence, that sort of thing? For sure, you know00:04:38 - 00:04:46, with COVID it has definitely added a layer of requirements for all banks, I00:04:46 - 00:04:52would say, particularly when a borrower self employed, they're now wanting00:04:52 - 00:04:58to see extra documentations. They just want to make sure that you know the00:04:58 - 00:05:05borrower's income is online or inline, I should say, than what their00:05:05 - 00:05:11income tax is suggesting it to be and that they haven't really had too00:05:11 - 00:05:16much of an impact with with COVID, particularly here in Melbourne, where00:05:16 - 00:05:20we've been the hardest hit. Yes. Oh, so to answer your question, yes, there00:05:20 - 00:05:25are a lot more documentations that need to be provided, particularly for self00:05:25 - 00:05:30employed customers. Okay, so banks are still lending money. If your income00:05:30 - 00:05:36hasn't been affected by COVID-19 restrictions, you still should be able to00:05:36 - 00:05:40borrow money. It shouldn't be any harder to borrow money, but the process00:05:40 - 00:05:47might be more involved, I suppose. It's just a little bit different to what many00:05:47 - 00:05:52customers might be accustomed to when they applied for finance pre-COVID.00:05:52 - 00:05:58And yeah, just if you know, if you're in a position to borrow money and00:05:58 - 00:06:03you know that you can borrow money, then you really got nothing to fear before00:06:03 - 00:06:08you place an application and if you're going through a broker then a broker's00:06:08 - 00:06:14going to tell you whether they can get the loan approved or not anyway. So all00:06:14 - 00:06:20I would say to customers is that you know, don't don't sort of fear the process,00:06:20 - 00:06:25provided that you know, your employment has been stable, your business00:06:25 - 00:06:31hasn't been affected and that, you know, you've got sort of strong, strong00:06:31 - 00:06:39finances going into the application. Okay, good. What about timelines? So is it00:06:39 - 00:06:43taking longer to get home loans approved? Should people allow a little bit00:06:43 - 00:06:49more of a time buffer when they're looking to apply for a home loan? I have00:06:49 - 00:06:54heard that some banks assessment and processing times are a bit longer than00:06:54 - 00:06:59usual. What's been your experience with that? Yeah, many customers are00:06:59 - 00:07:06looking to refinance at the moment and, many banks are offering cashback00:07:06 - 00:07:14offers. So banks that are offering cashbacks their lead times in processing00:07:14 - 00:07:21loans is not as desirable as other banks that are not offering cashback offers at00:07:21 - 00:07:26the moment. So again you know a good broker is going to be able to be00:07:26 - 00:07:32across that with lead times. If you know if your finances pressing, then00:07:32 - 00:07:37definitely avoid certain banks because you're not going to get the loan processed00:07:37 - 00:07:43in a timely manner. But if you're after, you know, the cash as part of00:07:43 - 00:07:47the refinance, let's say then, if you're happy to wait, then you know the00:07:47 - 00:07:52processing time is what it is. If you're purchasing a property, then definitely00:07:52 - 00:07:57steer clear of those lenders that are offering cashbacks at the moment,00:07:57 - 00:08:01particularly when your finances subject to... When your purchase, I should00:08:01 - 00:08:07say, subject to finance clause, there's nothing worse where a customer has00:08:07 - 00:08:12been placed with the lender, not knowing that the lead times are not going to00:08:12 - 00:08:17be able to meet their obligations on the contract when they're buying a house.00:08:17 - 00:08:23Okay, so a few things. I wanna clarify their cap by cashback that banks00:08:23 - 00:08:27offering, like a cashback offer. If you get a home loan with them or you00:08:27 - 00:08:33refinance with them, they'll say, we'll give you, like, $2000 or something00:08:33 - 00:08:43like that. So a cashback promotion relates to customers who are new to the00:08:43 - 00:08:53bank and that are refinancing. Okay. The cashback amount does vary it00:08:53 - 00:08:58varies depending on their loan size, and it also varies on the type of00:08:58 - 00:09:06bank that you're using. Okay, All right. And also again, apologies00:09:06 - 00:09:11for the background noises. We are working from home, and we've got little.00:09:11 - 00:09:16Marcus is trying extremely hard to be quiet. He's doing a wonderful job, isn't00:09:16 - 00:09:24it? He's a good boy. Just another thing that I wanted to clarify. So when00:09:24 - 00:09:28you're talking about putting in an offer when you put in an offer for a00:09:28 - 00:09:33property, if you haven't got a pre-approval on your finance yet, you can put in a00:09:33 - 00:09:38finance, clause, can't you? Yes, you can. And so you might say it's two00:09:38 - 00:09:42weeks or three weeks. We usually recommend three weeks, but If you have00:09:42 - 00:09:46been placed in the lender who's got really long processing times, that could00:09:46 - 00:09:51jeopardise your offer. So that's yet correct. Yes, you need to be aware of that.00:09:51 - 00:09:57What are there certain types of mortgages and home loans that are harder to00:09:57 - 00:10:01get approved? And not just speaking about COVID times, but just in general.00:10:01 - 00:10:04Are there certain types of mortgages and home loans that had just more00:10:04 - 00:10:09involved? You know, more workers involved or more paperwork is involved00:10:09 - 00:10:13there, there it more complex or tricky. A home loan application becomes00:10:13 - 00:10:21harder when you're asking for for their lending policy to be flexible00:10:21 - 00:10:26we call that in the industry when you're asking for an exception, that can00:10:26 - 00:10:33complicate lending assessment. And there could be a good chance that the00:10:33 - 00:10:38assessor, whoever's picked up the file, may not grant you those00:10:38 - 00:10:44exceptions. Complicated lending can make the process a little bit more00:10:44 - 00:10:50complex when, um, a borrower's a trust for an example. There's a lot more00:10:50 - 00:10:55paperwork that's involved with that kind of loans. There's a lot of00:10:55 - 00:11:00documentations that needs to be collected from the client to give to the bank.00:11:00 - 00:11:09Particularly it can complicate the assessment when the details of the00:11:09 - 00:11:13borrowing entity, in this case, being a trust like this example that I'm00:11:13 - 00:11:17using, you know, it's a lot of having to go back to the accountant getting that00:11:17 - 00:11:21issue fixed up. Then coming back to the client to get the documents signed00:11:21 - 00:11:27and giving it to the lender. So you know, it's just added layers. To simplify and00:11:27 - 00:11:32summarise loans can get difficult when you're asking for an exception from a00:11:32 - 00:11:38lender. What is an exception from a lender? So, for example, let's say that a00:11:38 - 00:11:42self employed customer is wanting to borrow money, and they've only been00:11:42 - 00:11:48self-employed for 12 months. But the lending criteria for the bank is that00:11:48 - 00:11:52you know the business needs to be established for two years. You know, that's00:11:52 - 00:11:58that's an exception, you know because it's outside policy. Another example00:11:58 - 00:12:05would bay if our customer's needing to use like overtime. And the00:12:05 - 00:12:11know, broker's place, the client with the lender that has a stringent policy00:12:11 - 00:12:14around. They're not accepting overtime at the moment because of COVID-1900:12:14 - 00:12:19for an example. You know that's asking for trouble. You know, you don't00:12:19 - 00:12:23want to muck around with those types of requests, best to just find00:12:23 - 00:12:27a lender. That's going to be able to work with the incomes that's being00:12:27 - 00:12:33presented rather than trying to jam jamming the deal with the lender00:12:33 - 00:12:37that it might be offering the best price. Or, you know, Quiet wants to deal00:12:37 - 00:12:42with would deal with that particular lender. I like that. Avoid trying to jam the00:12:42 - 00:12:48deal we make that it will have been turned into a tweet. Don't jam the deal.00:12:48 - 00:12:52Last questions. I know you've got to get back to work, and we've probably00:12:52 - 00:12:57only got another good two minutes out of Marcus being about to sit quietly00:12:57 - 00:13:03and watch his record a podcast. How can we make it easier for banks to assess00:13:03 - 00:13:08and process our loans? What can we do to make the assessor's jobs easier?00:13:08 - 00:13:14Provide the requested documentations as requested by the lender, particularly00:13:14 - 00:13:21with home loan refinancing. I find that customers can sometimes not00:13:21 - 00:13:26provide the correct documentation where they're taking a screenshot of their00:13:26 - 00:13:29home loan statement, but it doesn't have their names on it. You know, stuff00:13:29 - 00:13:35like that on. Many customers don't have access to computers or do everything00:13:35 - 00:13:39by phone and stuff like that. So well, especially now we've COVID-19 I mean,00:13:39 - 00:13:43how are we supposed to get out and get access00:13:43 - 00:13:50to a computer and a printer and a scanner and that sort of stuff. So provide00:13:50 - 00:13:56the right documentation to the broker. The broker should be very well versed00:13:56 - 00:14:03in what's required from from the lender. Make sure that whatever the00:14:03 - 00:14:07brokers asking, you you kind of give the right information back that way.00:14:07 - 00:14:10You know, you're not having to go back and forth back and forth all the time.00:14:10 - 00:14:20Sometimes it's unavoidable. But that would be one of my tips for trying to get a00:14:20 - 00:14:25loan application sort of done right the first time. That's a great tip. And I00:14:25 - 00:14:31would add to that, Do make sure that you use and you work with an00:14:31 - 00:14:36experienced mortgage broker because they know the lender policy inside and00:14:36 - 00:14:41out. And they will know how to package and present your home loan00:14:41 - 00:14:47application in the best possible way for that lender. And finally, don't jam the00:14:47 - 00:14:51deal. Thanks so much for coming onto the show that was really00:14:51 - 00:14:58informative. Thank you. Thanks for having me. And if you like this and if00:14:58 - 00:15:05you like this, give my mummy a five star review. I hope you do. Thanks00:15:05 - 00:15:09for joining us on the Dream Home movement. Be sure to come over and say hi00:15:09 - 00:15:14on Facebook and Instagram. I hope that your dream home projects are going00:15:14 - 00:15:17well, and I look forward to chatting with you again next week.