1 August 2018
For immediate release
Don’t Let the Little Things Become a Big Hassle
We’re told to not sweat the small stuff, but if you’re looking to get a mortgage it’s the small stuff that might have a
big impact on how much you can borrow.
Lenders are watching discretionary spend more closely now than ever before, says Mike Pero Mortgages chief executive
Mark Collins.
“Traditionally, some lenders have used benchmark figures to determine living expenses. More recently however, we are
seeing more and more lenders scrutinising exactly what applicants are spending their money on. For some borrowers this
is causing the application to be declined.
“That means socialising habits, spending on online streaming accounts or even gambling habits could be factored into how
much can be borrowed,” said Mr Collins.
Examples provided by Mike Pero Mortgages show how small, regular expenses such as online subscriptions to streaming
media services could reduce borrowing power by tens-of-thousands of dollars.
“For example, subscriptions for services such as Sky, Spotify, Netflix and Lightbox, and even monthly gym memberships,
which can total $300 per month may reduce borrowing power by as much as $50,000.
“Under heightened regulation, lenders are really drilling down into borrowers’ habits to see what they’re spending their
money on.
“This pattern of ‘forensic underwriting’, where lenders look closely at transaction records, is only going to increase.
Technology is making it easier for them to assess loan applications and lenders are keeping close tabs on their exposure
to risk,” said Mr Collins.
But would-be borrowers should not lose heart.
“It’s not about having to go without all those little things but rather being more aware of how little expenses can add
up.
“Most lenders use at least six months of past conduct to predict future spending habits. So, if you can demonstrate
you’re able to curb some unnecessary spending and stick to it, they’re likely to take a more favourable view.
“How lenders assess borrowing power also varies significantly, so it pays to get good advice about the available
options,” said Mr Collins.
ENDS