In the wake of COVID-19, banks have changed the way they interact with customers, including how they do lending. A number of key innovations include things like online mortgage applications, video calls instead of face to face meetings, and electronic documentation rather than the usual paper-based option. Find out here how obtaining a mortgage has changed in recent months and what you can expect when you apply for your next home loan.
A Move to Online
With Australians required to follow social distancing rules, it’s inevitable that the way we conduct our day to day business needed to change. Along with other industries, banks and lending organisations turned to online as a means of continuing business and helping customers during the pandemic.
A number of innovative changes were made around how applications were processed, interviews were conducted, and documents were signed. Now banks are calling on Government, hoping to make these innovations permanent.
If approved, banks will make permanent changes to the way they process home loan applications including:
• Allowing deeds to be created and signed for online.
• Accepting electronic signatures rather than the need for a paper document.
• Allowing the witnessing of documents to happen via video conferencing.
• Processing mortgages online.
The expectation is that the permanent move to online will likely speed up the application process significantly, and make it easier for homeowners to access lending right away, no matter where they are located.
Home Loan Approval Process
Understandably, most lenders have tightened up on their lending processes in light of the economic impact of COVID-19, specifically relating to a drop in income or job loss.
Eliza Owen, head of residential research at CoreLogic, said, "Monetary policy and financial regulation have sharply shifted in response to COVID-19. Policies now focus around deferring the implementation of a more conservative lending environment, ensuring high levels of liquidity among lenders."
Along with stringent checks being done on proving a sustainable and consistent income, verification of your current financial situation will also be far more rigorous, with banks often requiring more supporting documentation around your earnings and expenditure – such as letters from employers guaranteeing your employment.
Those who are self-employed or those who work as contractors may also find the checking more rigorous when needing to access lending, while certain jobs are for now flagged as risky, including those in tourism, aviation and hospitality.
There Are Still Options
With banks tightening up on lending, it’s now more important than ever to work through your options with a mortgage broker to ensure the success of your application. A broker with a solid number of lenders on their panel is uniquely placed to offer far more options than simply going to a Bank.
Contact Mortgage Express to talk your options for finance. We’ve already had success in helping clients secure a mortgage in these tough times and can talk you through both bank and non-bank options that may work for you.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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