In a post Royal Commission world, lenders are now asking about all your costs and are crossing into areas of health as well as anything you may spend your money on.
The Australian Financial Review reported on Monday 12th August, that the broker Tom Caesar was asked why a client was spending money($120)at radiology. Clearly lenders are “struggling” to come to grips with what is responsible lending in a post Royal Commission world.
The radiology cost was because the potential borrower, a mother, had had her son’s broken arm x-rayed. What if the lender was asking about something that was truly personal in relation to health or anything else?
What is also happening is that we are all reading the writing on the wall, (well not on the wall but we have a keen sense that something is not right in our economy) where house prices are falling and retail spending is going down and lenders are now thinking that they need to be more secure in a changing economy.
So it’s time to get a few new habits.
- Draw your budget out in cash each week and stay on budget. Draw the same amount each week and declare income and expenses on the forms from any lender.
- Be able to prove your income and outgoings. In the case of a business, make sure your accounts are up to date in a way that a lender would believe you. (If your accounts are propped up by debtors and other accrual transactions, then you will start to have difficulties.)
- “And”, the big “AND”…Do you really need to buy what you are looking at? In business there should never be a question of want. It’s always a need to run the business and make a profit. In your personal life you can have desires and needs that can be planned for.
Also, when you apply for a loan, be prepared to have the lender dig deep. Who knows, you could be asked for the colour of your underpants.