Bank Requirements in a Post-Covid World
While it has been business as usual at Tuckfields during the Covid-19 pandemic, there have been substantial changes to the requirements of banks and other lenders.
In the pre-Covid world, lenders would consider the applicant’s historic and current financial position and draw assumptions and conclusions about the borrower’s future ability to service the requested loan. The application would also be assessed against the lender’s credit risk criteria and the relevant Banking Code standards.
Not all lenders have changed their requirements, but many are scrutinising applications far more closely, particularly if you are a casual worker, self-employed, relying on dividend income or working in an industry that has been hit hard by restrictions and business closures. Banks and other lenders are also examining more carefully the living expenses and discretionary spending of loan applicants and will try to estimate the borrower’s post-Covid position.
Due to these additional lender requirements, assessment times for finance applications are taking considerably longer for some lenders. As the purchaser or seller of a property, we know you are excited to move into your new home or receive the proceeds of a sale as soon as possible.
However, ensuring adequate timeframes are included in your contract for finance approval and settlement will allow for any delays which may occur. Since a delay in finance approval may give the vendor an opportunity to terminate the contract, negotiating a longer timeframe upfront can help avoid additional and unnecessary stress for all parties. An earlier settlement date can always be requested if finance is approved sooner than anticipated, subject to the agreement of all parties.
“We recommend purchasers speak with a mortgage broker or lender before submitting an offer”
Mortgage brokers can help you determine the best timeframe based on your personal circumstances and borrowing requirements, and their understanding of what lenders will assess.
The experienced team at Tuckfields would be more than happy to answer any questions you may have about buying or selling in a post-Covid world, and how to ensure an efficient and stress-free outcome for your property transaction.
We can also assist with recommending a mortgage broker if you would like to find out more about your lending options.
Please note that the information contained in this article is of a general nature only and does not constitute legal advice. Tuckfield Agent Solutions does not take responsibility for any errors or omissions obtained from the use of this information.