Is it harder to get a home loan now with Carl Violeta

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

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Guest bio

Carl’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.

Transcript

*This transcript is automated, so may not be 100% accurate*

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In this special bonus episode of the Dream Home Movement, we look at

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whether or not it's harder to get a home loan now. With COVID-19 restrictions

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and tightened lending criteria, some people are reporting that it may be more

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tricky to get a home loan. But is that true, or is it just our perception?

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To answer that question. I've invited a special guest and experienced Mortgage

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Broker Carl Violeta, he also happens to be my husband onto the show.

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Welcome to the Dream Home Movement. This is your weekly dose of home

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and property inspiration, bringing you clever tips and advice from the very

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best experts. And real life like Renno stories with your host, Jo Violeta.

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Thank you for tuning in to this special bonus episode of the Dream Home

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Movement. Now if we haven't met before. Hello, My name's Jo Violeta, and I

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co-own a successful award winning mortgage brokerage with my husband carl.

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It is Violeta Finance, and this episode is brought to you by Violeta

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Finance. If you need help securing a home loan, refinancing your Mortgage or

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organising a loan for your investment property. We would love to help

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you. Now just to let you know who we are still in the midst of the COVID-19

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restrictions here in Melbourne and that means that we are working from

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home in very close quarters. So if you hear any background noises on this

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episode, maybe kids doing crafts or playing or some typing or something like

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that, it is because we are all working from home and also because of the COVID-19

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restrictions. I don't have access to the usual recording equipment that I

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would use for the podcast. I can't go to the radio station. I can't get into the

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office to access my hi-tech equipment. So Carl and I huddled over a desk and a

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microphone at home together, trying to record this episode for you.

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Welcome to the show, Carl. It's lovely to have you back on. I haven't had you

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on the show for a while. It has been a little while, and thanks for having me.

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So today we are answering the question. Is it harder to get a home loan right

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now? So let's first of all, look at it from the perspective of COVID-19. So

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we're recording this episode on September 30th. We live in Melbourne in

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Australia, so we are right in the still in the midst of COVID-19 restrictions.

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Have covert COVID-19 restrictions made it harder for people to secure a home loan?

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If a client has been affected by COVID, yes, it has been challenging to get

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loans approved for them. But for other clients that the only effect of COVID

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has been of a personal nature and not a financial nature then no that hasn't

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really been any stoppage of the flow of finance for those types of customers.

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Customers were working in the retail setting in sort of hospitality in the airline

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industry then. Yet those those types of employment and those types of

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customers would find it a bit challenging to try and secure finance. What about

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the way lenders are assessing applications, especially expenses? What I've

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heard is that lenders are going through applications with a fine-tooth comb now

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Have you found that to be the case? It depends on the bank that you

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suggest to the clients. There are banks that will go through bank statements to

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verify living expenses as well as salary credits. But not all banks do do that,

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eh? So, yeah, it really just depends on which path you take the customer in

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relation to bank statements being forensically investigated. And is it just

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the bank statements that they're going through and scrutinising are they

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scrutinising other documents, other evidence or information asking for a lot of

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additional documents, proof, evidence, that sort of thing? For sure, you know

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, with COVID it has definitely added a layer of requirements for all banks, I

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would say, particularly when a borrower self employed, they're now wanting

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to see extra documentations. They just want to make sure that you know the

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borrower's income is online or inline, I should say, than what their

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income tax is suggesting it to be and that they haven't really had too

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much of an impact with with COVID, particularly here in Melbourne, where

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we've been the hardest hit. Yes. Oh, so to answer your question, yes, there

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are a lot more documentations that need to be provided, particularly for self

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employed customers. Okay, so banks are still lending money. If your income

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hasn't been affected by COVID-19 restrictions, you still should be able to

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borrow money. It shouldn't be any harder to borrow money, but the process

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might be more involved, I suppose. It's just a little bit different to what many

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customers might be accustomed to when they applied for finance pre-COVID.

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And yeah, just if you know, if you're in a position to borrow money and

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you know that you can borrow money, then you really got nothing to fear before

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you place an application and if you're going through a broker then a broker's

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going to tell you whether they can get the loan approved or not anyway. So all

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I would say to customers is that you know, don't don't sort of fear the process,

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provided that you know, your employment has been stable, your business

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hasn't been affected and that, you know, you've got sort of strong, strong

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finances going into the application. Okay, good. What about timelines? So is it

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taking longer to get home loans approved? Should people allow a little bit

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more of a time buffer when they're looking to apply for a home loan? I have

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heard that some banks assessment and processing times are a bit longer than

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usual. What's been your experience with that? Yeah, many customers are

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looking to refinance at the moment and, many banks are offering cashback

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offers. So banks that are offering cashbacks their lead times in processing

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loans is not as desirable as other banks that are not offering cashback offers at

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the moment. So again you know a good broker is going to be able to be

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across that with lead times. If you know if your finances pressing, then

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definitely avoid certain banks because you're not going to get the loan processed

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in a timely manner. But if you're after, you know, the cash as part of

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the refinance, let's say then, if you're happy to wait, then you know the

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processing time is what it is. If you're purchasing a property, then definitely

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steer clear of those lenders that are offering cashbacks at the moment,

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particularly when your finances subject to... When your purchase, I should

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say, subject to finance clause, there's nothing worse where a customer has

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been placed with the lender, not knowing that the lead times are not going to

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be able to meet their obligations on the contract when they're buying a house.

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Okay, so a few things. I wanna clarify their cap by cashback that banks

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offering, like a cashback offer. If you get a home loan with them or you

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refinance with them, they'll say, we'll give you, like, $2000 or something

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like that. So a cashback promotion relates to customers who are new to the

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bank and that are refinancing. Okay. The cashback amount does vary it

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varies depending on their loan size, and it also varies on the type of

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bank that you're using. Okay, All right. And also again, apologies

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for the background noises. We are working from home, and we've got little.

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Marcus is trying extremely hard to be quiet. He's doing a wonderful job, isn't

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it? He's a good boy. Just another thing that I wanted to clarify. So when

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you're talking about putting in an offer when you put in an offer for a

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property, if you haven't got a pre-approval on your finance yet, you can put in a

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finance, clause, can't you? Yes, you can. And so you might say it's two

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weeks or three weeks. We usually recommend three weeks, but If you have

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been placed in the lender who's got really long processing times, that could

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jeopardise your offer. So that's yet correct. Yes, you need to be aware of that.

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What are there certain types of mortgages and home loans that are harder to

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get approved? And not just speaking about COVID times, but just in general.

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Are there certain types of mortgages and home loans that had just more

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involved? You know, more workers involved or more paperwork is involved

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there, there it more complex or tricky. A home loan application becomes

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harder when you're asking for for their lending policy to be flexible

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we call that in the industry when you're asking for an exception, that can

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complicate lending assessment. And there could be a good chance that the

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assessor, whoever's picked up the file, may not grant you those

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exceptions. Complicated lending can make the process a little bit more

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complex when, um, a borrower's a trust for an example. There's a lot more

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paperwork that's involved with that kind of loans. There's a lot of

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documentations that needs to be collected from the client to give to the bank.

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Particularly it can complicate the assessment when the details of the

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borrowing entity, in this case, being a trust like this example that I'm

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using, you know, it's a lot of having to go back to the accountant getting that

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issue fixed up. Then coming back to the client to get the documents signed

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and giving it to the lender. So you know, it's just added layers. To simplify and

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summarise loans can get difficult when you're asking for an exception from a

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lender. What is an exception from a lender? So, for example, let's say that a

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self employed customer is wanting to borrow money, and they've only been

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self-employed for 12 months. But the lending criteria for the bank is that

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you know the business needs to be established for two years. You know, that's

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that's an exception, you know because it's outside policy. Another example

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would bay if our customer's needing to use like overtime. And the

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know, broker's place, the client with the lender that has a stringent policy

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around. They're not accepting overtime at the moment because of COVID-19

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for an example. You know that's asking for trouble. You know, you don't

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want to muck around with those types of requests, best to just find

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a lender. That's going to be able to work with the incomes that's being

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presented rather than trying to jam jamming the deal with the lender

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that it might be offering the best price. Or, you know, Quiet wants to deal

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with would deal with that particular lender. I like that. Avoid trying to jam the

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deal we make that it will have been turned into a tweet. Don't jam the deal.

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Last questions. I know you've got to get back to work, and we've probably

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only got another good two minutes out of Marcus being about to sit quietly

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and watch his record a podcast. How can we make it easier for banks to assess

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and process our loans? What can we do to make the assessor's jobs easier?

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Provide the requested documentations as requested by the lender, particularly

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with home loan refinancing. I find that customers can sometimes not

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provide the correct documentation where they're taking a screenshot of their

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home loan statement, but it doesn't have their names on it. You know, stuff

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like that on. Many customers don't have access to computers or do everything

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by phone and stuff like that. So well, especially now we've COVID-19 I mean,

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how are we supposed to get out and get access

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to a computer and a printer and a scanner and that sort of stuff. So provide

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the right documentation to the broker. The broker should be very well versed

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in what's required from from the lender. Make sure that whatever the

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brokers asking, you you kind of give the right information back that way.

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You know, you're not having to go back and forth back and forth all the time.

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Sometimes it's unavoidable. But that would be one of my tips for trying to get a

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loan application sort of done right the first time. That's a great tip. And I

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would add to that, Do make sure that you use and you work with an

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experienced mortgage broker because they know the lender policy inside and

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out. And they will know how to package and present your home loan

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application in the best possible way for that lender. And finally, don't jam the

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deal. Thanks so much for coming onto the show that was really

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informative. Thank you. Thanks for having me. And if you like this and if

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you like this, give my mummy a five star review. I hope you do. Thanks

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for joining us on the Dream Home movement. Be sure to come over and say hi

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on Facebook and Instagram. I hope that your dream home projects are going

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well, and I look forward to chatting with you again next week.